Uncorrected/ Not for Publication-13.05.2015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.
(Contd. by KR/2R)
KR/PSV/2R/2.45
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.
(Continued by 2S/KS)
KS-VNK/2S/2.50
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)
