Black Money

          Uncorrected/ Not for Publication-13.05.2015

                           The question was proposed.

 DEPUTY CHAIRMAN: Okay. The time allotted to this is two

hours. Should we stick to two hours or reduce it to one hour?

…(Interruptions)… All right.  Now, Dr. E.M.S. Natchiappan.

E.M. SUDARSANA NATCHIAPPAN (TAMIL NADU): Mr. Deputy

Chairman, Sir, I support the Black Money (Undisclosed Foreign

Income and Assets) and Imposition of Tax Bill, 2015.  As our leader

has said, the Congress Party fully supports this Bill.  At the same time,

we have to bring up certain deficiencies which are there to be rectified

in future amendments.

First of all, I would like to bring to the attention of the

Government that we are bound by the United Nations General

Assembly which, as early as 31st October,2003, had made that on the

basis of recalling its Resolution 55/61 of 4th December, 2000, it

established an ad hoc committee to go into the question of these

types of evasion of taxation throughout the world.  It happened for

three years by having different types of meetings and finally, they

came forward with the United Nations Convention against Corruption.

I would just quote the beginning of the Preamble.  I quote,

“Concerned about the seriousness of problems and threats posed by

corruption to the stability and security of societies, undermining the

institutions and values of democracy, ethical values and justice

jeopardising sustainable development and the rule of law

”. This is

where the Government has it.  All the States-Parties of the Convention

have signed it.  140 countries have signed this Convention.  On that

basis, different levels of discussions were going on and finally, they

came out with different topics and chapters, so to say, covering about

71 articles.  In different ways, States-Parties have to follow it in their

own countries.  I find that this particular Bill which is coined as the

Black Money Bill (Undisclosed Foreign Income and Assets) and

Imposition of Tax Bill is very, very fragile and it is only an extension of

Section 139 of the Income Tax Act.  Section 139 is very clear in stating

that the filing of Income Tax Return is compulsory. In various cases,

they are saying that. Finally, sub-clause (3) provides that any asset

including financial interest in any entity located outside India or signing

authority in any account located outside India is required to file a

return of income in prescribed form compulsorily, whether or not he

has the income chargeable to tax. But, if you see the present Act, it

defines why this particular Act has come into force.

 KR/PSV/2R/2.45

(Contd. by KR/2R)

E.M. SUDARSANA NATCHIAPPAN (CONTD.): On the basis of

the definition, we can find in clause 2 (11) “undisclosed asset located

outside India” means an asset (including financial interest in any

entity) located outside India, held by the assessee in his name or in

respect of which he is a beneficial owner, and he has no explanation

about the source of investment in such asset or the explanation given

by him is in the opinion of the Assessing Officer unsatisfactory.” This

is, more or less, expansion of section 139.  If we go further, clause 4

also defines like that. Finally, we can very easily find out how the

architecture of this Bill is repeated on the basis of the Income-tax Act.

The Income-tax Act is also having the Assessing Officer.  It is having

its own hierarchy of officers who go into it.  If the officer has given a

verdict, then, about that, there is an appeal provision given for the Tax

Appellate Tribunal. Similarly, the Tax Appellate Tribunal is vested with

the same powers in this Bill for the violation also. Then, they can go to

the High Court, and finally they can end up in the Supreme Court.

This is the architecture on which this Bill is made. That means we are

repeating the same Act which is already there in the Income-tax Act,

and we are culling out certain portions, and defining it further, and

saying that we want to stop the black money.  Actually, we are not

addressing the problem which we have promised to the people. In the

international Convention also we have shown such a position, and I

will quote from article 3 of the international Convention.  “This

Convention shall apply, in accordance with its terms, to the

prevention, investigation and prosecution of corruption and to the

freezing, seizure, confiscation and return of the proceeds of offences

established in accordance with this Convention.” This is the promise

you have made. We have accepted this Convention.  But now we

have not mentioned anything on the topic of prevention, investigation;

only the prosecution is there. There is nothing on the freezing, seizure,

confiscation and return of the proceeds of offences. That means, we

just want to make a white washing of our own enactments, telling that

we are very much interested in abolishing black money, and,

therefore, we are bringing a law.  But really are we making that law?

We are just evading our international commitment which we made.

Similarly, Chapter II of Preventive Anti-corruption Policies and

Practices, article 5, clearly says what are the preventive measures that

you are taking in a Bill represented by the State. There they have to

make it clear in article 1, the Statement of Purposes. The purposes of

this Convention are:  (a) To promote and strengthen measures to

prevent and combat corruption more efficiently and effectively; (b)  To

promote, facilitate and support international cooperation and technical

assistance  in the prevention of and fight against corruption, including

in asset recovery; (c) To promote integrity, accountability and proper

management of public affairs and public property.” That means we

have to come forward with a domestic legislation, covering the

preventing measures, that is, the preventive anti-corruption policies

and practices which says in article 5.1 “Each State party shall  in

accordance with the fundamental principles of this legal system

develop and implement, or maintain  effective, coordinated anti-

corruption policies that promote the participation of the society and

reflect the principles of the rule of law, proper management of the

public affairs and public property, integrity, transparency and

accountability.”  We are not covering all these things.  But we are

making some small definition here. Article 7 deals with how public

sector has to be accountable for this purpose.

KS-VNK/2S/2.50

(Continued by 2S/KS)

E. M. SUDARSANA NATCHIAPPAN (contd.): Article 8 is on

‘Codes of conduct for public officials’.  Lots of explanations were

given.  Article 9 is on ‘Public procurement and management of public

finances’.  These are all sources of black money. These are the

sources from where this would come out.  Article 10 is on ‘Public

reporting’.  Let me quote, and it says, “Taking into account the need

to combat corruption, each State Party shall, in accordance with the

fundamental principles of its domestic law, take such measures as

may be necessary to enhance transparency in its public

administration, including with regard to its organization, functioning

and decision-making processes, where appropriate. Such measures

may include, inter alia:” and, then, it explains further.   Article 11 is on

‘Measures relating to the judiciary and prosecution services’.  Only this

has been incorporated in the Act; nothing more than that.  That is

already there in the Income Tax Act.  Article 12 is on ‘Private Sector’.

It says, “Each State Party shall take measures, in accordance with the

fundamental principles of its domestic law, to prevent corruption

involving the private sector, enhance accounting and auditing

standards in the private sector and, where appropriate, provide

effective, proportionate and dissuasive civil, administrative or criminal

penalties for failure to comply with such measures.” Nothing has been

addressed here on this aspect. Article 13 is on ‘Participation of

society’.  Nothing is addressed here.

Article 14 is on ‘Measures to prevent money-laundering’.

Already, there is an Act, which is also fragile. Then, Chapter III is on

Criminalisation and Law Enforcement.  Article 15 is on ‘Bribery of

national public officials’.  Nothing is addressed here.  Article 16 is on

‘Bribery of foreign public officials and officials of public international

organisations’.  Nothing is addressed here.  Article 17 is on

‘Embezzlement, misappropriation or other diversion of property by a

public official’.  Nothing has been taken into consideration.  Article 18

is on ‘Trading in influence’.  Article 19 is on ‘Abuse of functions’.

Article 20 is on ‘Illicit enrichment’.  Article 21 is on ‘Bribery in the private

sector’.  Article 22 is on ‘Embezzlement of property in the private

sector’.  Article 23 is on ‘Laundering of the proceeds of a crime’.

Nothing is addressed here.  Article 24 is on ‘Concealment’.  Article 25

is on ‘Obstruction of Justice’.  Article 26 is on ‘Liability of Legal

Persons’.  Article 27 is on ‘Participation and Attempt’.  Article 28 is on

‘Knowledge, Intent and Purpose as Elements of an Offence’.  Article

29 is on ‘Statute of Limitations’.  Article 30 is on ‘Prosecution,

Adjudication and Sanctions’.  Nothing is addressed here.  Article 31 is

very, very important.  It is totally missing.  It goes against the wishes of

the people.  Article 31 is on ‘Freezing, Seizure and Confiscation’.  I will

quote a small portion of it.  It says, ” 1. Each State Party shall take, to

the greatest extent possible within its domestic legal system, such

measures as may be necessary to enable confiscation of:

(a) Proceeds of crime derived from offences established in

accordance with this Convention or property the value of

which corresponds to that of such proceeds;

(b) Property, equipment or other instrumentalities used in

or destined for use in offences established in accordance

with this Convention.”

Nothing has been addressed in this Bill.  We can very

conveniently say that the Money-laundering Act will apply in this case.

But it is not applicable; it has more or less been diluted.  It does not

meet the requirements of criminal justice.

Article 32 is on ‘Protection of Witnesses, Experts and Victims’.

Nothing has been said here.  Article 33 is on ‘Protection of Reporting

Persons’.  Article 34 is on ‘Consequences of Acts of Corruption’.

Nothing has been said here.  Article 35 is on ‘Compensation for

Damage’.  Nothing is said here.  Article 36 is on ‘Specialized

Authorities’.  Our own officers become arbitrators of Income-tax.

Even when they themselves violate that particular provision, they

decide on it.  Article 37 is on ‘Cooperation with law enforcement

authorities’.  Article 38 is on ‘Cooperation between national

authorities’.  Article 39 is on ‘Cooperation between national authorities

and the private sector’.  Article 40 is on ‘Bank secrecy’.  Article 41 is

on ‘Criminal record’.  Article 42 is on ‘Jurisdiction’.  Finally, you have

Article 43 on ‘International cooperation’.  Nothing is said, except one

chapter which says that in this way you will go in for bilateral

relationships; but we are not following the international convention to

which we are the signatories.  Article 44 is on ‘Extradition’.  We do not

apply this provision at all.  Article 45 is on ‘Transfer of Sentenced

Persons’.

-KS/RL-DS/2.55/2T

(CONTD. BY RL/2T)

E.M. SUDARSANA NATCHIAPPAN (CONTD.) : Article 46 is

about mutual legal assistance and in that way it goes on till Article 71

but none of these things like transfer of criminal proceedings, law

enforcement co-operation, joint investigation, special investigative

techniques and finally asset recovery. Article 52 says about prevention

and detection of transfers of proceeds of the crime, but nothing is said

here.  Article 53 says about the measures for the direct recovery of the

property.  Article 54 is about the mechanisms for recovery of the

property through international cooperation in confiscation.  Article 55

is about International cooperation for purposes of confiscation.  Article

56 is about special cooperation.  Article 57 is about return and

disposal of assets.  Finally, Chapter VI is about technical assistance

and information exchange and it goes on like that and Mechanism for

Implementation, Chapter VII, Article 67, Conference of the State

parties and convention.  Now we are going to attend the conference

of the State parties.  In 2015 it is going to be started.  What are we

going to report it?  Are we going to give this small fragile Bill before the

international body to tell that we are preventing everything, but we are

the signatories to the International Convention?  Sir, I request the

Government to come forward with a new amended Bill, more so, a

comprehensive Act, to address all the provisions of the conventions.

We were the signatories as early as in 2003 when the NDA

Government was there and subsequently you have given another

chance and instead of talking something outside and doing something

inside, you can straightaway go forward with a proper convention,

with a proper domestic law and that will be a good thing to show that

India is an investment destination and you can believe us and come

here as we are following the International Convention. Thank you very

much.                                                                                                                                                                                                                                                                               (Ends)

DEPUTY CHAIRMAN : Thank you, Shri Natchiappan.

About Dr. E.M. Sudarsana Natchiappan MA ML( USA) Ph D

Dr. E.M. Sudarsana Natchiappan, was a Member of Parliment - Lok Sabha one term and two terms Rajya Sabha and Union Minister of State for Commerce and Industy, New Delhi Sr.Lawyer ,Supreme court of India, NewDelhi, India. President, Indian society of International Law, New Delhi Founder of 21st century International School, Sivagangai Tamil Nadu. Author of books WTO and India, RTI and others
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