There is no reliable information about the money of Indians in undisclosed bank accounts outside the jurisdiction of the country. There are various estimations based on various assumptions and presumptions which may not be correct. Further there is a marked difference in the amount of these estimates. During the Budget Speech of 2012, the Finance Minister announced that he proposes to lay on the table of the House a white paper on black money in the current session of the Parliament.
A proposal for getting a study conducted to estimate the quantum of black money both inside and outside the country has already been approved by Union Finance Minister. The following Government institutes have been approved in March, 2011 for conducting separate studies on black money:
(a) National Institute of Public Finance and Policy (NIPFP);
(b) National Institute of Financial Management (NIFM); and
(c) National Council of Applied Economic Research (NCAER).
Memorandum of understanding has been signed between CBDT and each of three institutes on 21.03.2011. The study will be completed within a period of 18 months from the date of MOU.
Government has formulated a five pronged strategy to tackle the menace of black money which is as below:
(i) Joining the global crusade against black money,
(ii) Creating an appropriate legislative framework,
(iii) Setting up institutions for dealing with Illicit Funds,
(iv) Developing systems for implementation (new manpower policy); and
(v) Imparting skills to the manpower for effective action (constant training for skill development).
In line with above strategy, the Government has taken several steps in the last two financial years, the details of which are discussed in the following paragraphs.
1. Joining the global crusade against black money:
1.1 Black money does not limit itself to the geo- political boundaries. It transcends borders and has become a global problem. The countries across the world have started a concerted global effort and as a part of global effort against black money, India has played a proactive role in pointing out deficiencies in the assessment of various countries by the Peer Review Group of the Global Forum. Government is also playing an active role in ensuring that these countries remove the deficiencies to bring more transparency.
1.2 India has joined the Task Force on Financial Integrity and Economic Development in order to bring greater transparency and accountability in the financial system.
1.3 India has joined as the 34th member of Financial Action Task Force (FATF) on 25th June 2010. FATF membership is important as it will help India to build the capacity to fight terrorism and trace terror funds and to successfully investigate and prosecute money laundering and terrorist financing offences.
1.4 India has joined the Asia Pacific Group (APG) against Money laundering. The 14th annual Plenary of Asia Pacific Group (APG) was held in Kochi from 18-22 July, 2011. More than 320 delegates from 41 jurisdictions, observers and various organisations attended the Plenary which was inaugurated by the Union Finance Minister. India is the co-chair of this forum till July 2012.
1.5 India has gained Membership of the Eurasian Group (EAG) in December 2010.
1.6 India has joined the Egmont Group which is an international network fostering improved communication and interaction among Financial Intelligence Units (FIU).
1.7 India is an active member of G 20 and has played a key role both in identifying issues and drafting communiqués. In the G 20 Seoul Summit, November 11-12, 2010, a clause “countries to further enter into Tax Information Exchange Agreements wherever required by the partner country” was incorporated in the communiqué at the instance of India.
2. Creating an appropriate legislative framework:
The Government has been constantly trying to strengthen the legislative frame work to control generation of black money in the country as well as control the flight of such illicit fund to foreign shores.
2.1 In pursuance of this India has so far completed negotiations of 22 new Tax Information Exchange Agreements with various tax heavens. Eleven of these agreements have also been approved by the cabinet. (Annexure- I). The Multilateral Convention on Mutual Administrative Assistance in Tax Matters has been signed. The Multilateral Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 Protocol has been ratified by the Hon’ble President of India and the instrument of ratification was deposited with one of the Depositaries i.e; OECD.
2.2 India has initiated process of negotiation with 75 countries to broaden the scope of Article concerning Exchange of Information to specifically allow for exchange of banking information and information without domestic interest. As on date, it has completed negotiation with 29 existing Double Tax Avoidance Agreement (DTAA) countries to update this Article. These agreements have also been initialled. 19 new DTAAs have also been finalised where the Exchange of Information Article is in line with the international standards. In short negotiations/renegotiations of DTAAs with 48 countries have been completed. DTAAs with Switzerland (amendment), Norway (revised), Mozambique (new), Colombia (new), Ethiopia(new), Georgia(new), Taipei(new), Nepal, Lithuania (new),Tanzania(revised), Singapore (revised), Finland (revised), Australia (revised), Uzbekistan (revised), UAE (revised), Mexico (new) Uruguay (new) and Estonia (new) have been signed.
Amendment protocol to the Double Taxation Avoidance Agreement (DTAA) between the Government of the Republic of India and the Government of the Kingdom of Sweden, Republic of Romania, Republic of Croatia, Kingdom of Spain, Kingdom of Morroco, French Republic, TIEA with Gibraltar has been approved by the Cabinet. Negotiations for revising the existing DTAA with the Government of Srilanka and South Africa have been completed which expanded the scope of Exchange of Information (Annexure-II).
2.3 The protocol amending our tax treaty with Switzerland was signed on 30th August 2010 and has been approved recently by the Swiss Parliament (on 17th June 2011). After following the mandatory constitutional process the DTAA will become operational. It will enter into force when Switzerland completes its internal process. Upon entry into force it will allow India to obtain banking information (as well as information without domestic interest) from Switzerland in specific cases for a period starting from 1st April 2011. The mutual agreement with Switzerland for liberal interpretation of identity requirements for Exchange of Information has been signed by the Competent Authorities and has been entered into force w.e.f. 01.04.2011.
The Protocol amending the “Agreement between the Republic of India and the Kingdom of Norway for avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital” has been notified in the Gazette of India.
The Protocol amending the “Convention between the Republic of India and the United Kingdom of Great Britain and Northern Ireland for avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains” has been approved by the Cabinet of India.
The Protocol amending the “Double Taxation Avoidance Agreement” between India and Lativia has been approved by the Cabinet.
2.4 There are certain countries or territories outside India which do not effectively exchange information with India as an anti-avoidance measure. The Government has enacted legislation to prescribe a tool box of counter measures against these non-cooperative jurisdictions. For this purpose, section 94A has been inserted into the Income-tax Act through Finance Act, 2011. This section gives an enabling power to the Central Government to notify any country or territory outside India, having regards to lack of effective exchange of information by it with India, as a notified jurisdictional area. Once the country/territory as such is notified as a non-cooperative jurisdiction, transactions with residents of such country/territory are subject to higher withholding, certain disallowances and the transactions are also subject to transfer pricing regulations.
2.5 The Government has proposed the following specific new measures for unearthing black money in the Direct Taxes Code Bill:
2.5.1 For the purpose of levy of wealth tax, taxable assets have been defined to include deposits in banks located outside India in case of individual, unreported bank deposits in case of others, interest in a foreign trust or any other entity (other than foreign company) and any equity or preferential shares held in a controlled foreign company.
2.5.2 The General Anti Avoidance Rule (GAAR) has been incorporated to deal with aggressive tax planning devices used to circumvent tax laws.
2.5.3 Specific Controlled Foreign Company (CFC) rules have been incorporated to bring to tax passive income earned by residents from substantial shareholding in companies situated in low tax jurisdictions.
2.5.4 A reporting requirement has been introduced making it obligatory on the part of resident assesses to furnish details of their investment and interest in any entity outside India in the form and manner as may be prescribed.
2.6 According to the Global Financial Integrity Report, major channel for illicit outflow is transfer of funds through mispricing which accounts for 77.6% of total illicit outflows. The existing transfer pricing provisions of the government, which were introduced in the year 2001 are not detailed provisions as compared to transfer pricing provisions of developed countries. It was felt that there is need to upgrade these transfer pricing provisions to meet the challenges of growing intangible economy and various complex cost sharing arrangements. As per directions of FM, DGIT (International Taxation) has constituted a committee to look into the issue of revising the transfer pricing provisions. The committee has already submitted its interim report which is under consideration.
2.7 The Prevention of Money Laundering Act (PMLA) was amended on 1st June 2009, whereby the predicate offences listed in the Schedule of the Act were substantially increased. This amendment has tremendously widened the scope of Money Laundering Investigations.
3. Setting up institutions for dealing with Illicit Funds;
3.1 Government has decided to set up Exchange of Information (EoI) Cell for an effective exchange of information to curb tax evasion. Efforts are on to put the cell in place under Foreign Tax Division of CBDT.
3.2 Government has approved the creation of the Directorate of Income Tax (Criminal Investigation), in the Central Board of Direct Taxes. The DCI will perform functions in respect of criminal matters having any financial implication punishable as an offence under any direct tax law.
3.3 Government has set up Income tax Overseas Units in two Indian Missions abroad. Eight more such units are being setup in the current Financial Year to strengthen information exchange mechanism. Approval of Appointment of Cabinet Committee has been received for the posting of 7 officers belonging to IRS (IT) at first Secretary level in newly created Income Tax Overseas units, in Indian Mission abroad. The matter is being coordinated with MEA for placing these officers at the disposal of MEA.
3.4 In order to augment the reach of the Directorate of Enforcement, the Government has approved upgradation of five existing Zonal offices as Regional offices and five existing Sub Zonal offices as Zonal offices. It has also approved creation of a new Zonal office and 16 new Sub zonal offices of Enforcement Directorate across the country.
3.4.1 The Process of filling up the additional posts sanctioned by the Government as also for upgradation of the existing offices and setting up of new offices of Enforcement Directorate has started. As per the Action Plan, the Ministry of Finance is filling up the Group A posts of the Directorate in three phases.
3.4.2 The following steps have been taken to fill the vacancies:
(i) Based on advertisement issued on 17.09.2011 for Group ‘A’ posts orders for appointment of 2 Special Directors, 2 additional Directors and 1 Joint Director were issued. Officers have joined expect 2 SDE who are likely to join shortly. Again advertisement has been issued on 30.06.2012 for appointment of 2 Special Directors, 11 Joint Directors, 5 Deputy Legal Advisors and 9 Assistant Legal Advisors for appointment on deputation/absorption were issued.
(ii) Vacancy Circulars of Group ‘B’ posts were issued for different posts for appointment on deputation by ED. Pursuant to the issue of the vacancy circulars Two Deputy Director, 59 Assistant Directors, 38 Enforcement Officers, 19 Assistant Enforcement Officers have joined for appointment on deputation.
(iii) 9 Lower Division Clerks 1 Upper Division Clerk have joined on direct recruitment basis through SSC.
(iv) Circular Order has also been issued on 27.09.2011 regarding territorial jurisdiction of Regional, Zonal and Sub Zonal Offices of the Directorate.
4. Developing systems for implementation:
4.1 Government has doubled the strength of Foreign Tax Division, which deals with the work of exchange of information.
4.2 The Directorate of International Taxation and Transfer Pricing in the Income Tax Department have also been strengthened as major part of the flow of illicit money outside of India takes place through mispricing of international transaction.
4.3 In a bid to strengthen the Enforcement Directorate, the Government has approved creation of 1318 new posts at various levels. The process of filling up of these posts has already been started by the Deptt. of Revenue.
5. Imparting skills to the manpower for effective action:
5.1 As a part of capacity building and skill development, 51 senior Officers were sent abroad for specialized training in the field of International Taxation and Transfer Pricing in F.Y. 2010-2011.
5.2 Since skill up gradation in international tax and transfer pricing require substantial time and resource, a posting policy has been approved which provides that officers may be posted in the Directorate for the period not less than five years.
5.3 A delegation of 8 IRS Officers led by the Member (Investigation), CBDT visited USA to have discussions with the US IRS-CI and other law enforcement agencies with the objective to enable the investigators to appreciate the multiple nuances of law enforcement from a Criminal Investigation perspective at the structural level and at the functional plane. The interaction will enable the Income Tax Department to get a comprehensive exposure to the critical issues in the field of Direct tax law enforcement which inter alia include the following:
• Legal Framework under which IRS-IC functions and the efficacy of the laws with regard to prosecution of tax offenders, prosecution of offenders involved in economic crimes which are subversive or against national security;
• Inter-agency linkages of the IRS-IC with the FBI, Dept. of Treasury and other relevant departments/organizations; and
• Interaction of IRS-IC with other law Enforcement Agencies (LEA).
Apart from the above the Government has also taken the following measures-
6. The Government has constituted a Committee on 27th May, 2011 under the Chairmanship of Chairman, Central Board of Direct Taxes (CBDT) to examine ways to strengthen laws to curb the generation of black money in the country, its illegal transfer abroad and its recovery. The Committee include Member (L&C), CBDT, Director Enforcement (ED), Director General of Revenue Intelligence (DRI), Director General (Currency), Joint Secretary (FT&TR), CBDT; Director,(FIU-IND) as Members. The Committee will examine the existing legal and administrative framework to deal with the menace of generation of black money through illegal means including, inter alia,
(a) Declaring wealth generated illegally as national asset;
(b) Enacting/amending laws to confiscate and recover such assets; and
(c) Providing for exemplary punishment against its perpetrators.
The Committee will also consult all stakeholders and submit its report within a period of six months. The tenure of the Committee headed by Chairman, CBDT has been extended by a period of two months i.e. upto 31.03.2012.
6.1 The second meeting of the Committee on the Black-Money was held on 29th July, 2011 and it has been decided that the Committee would hold its next meeting in September 2011 and in the meanwhile;
(i) Letters have been written to various Industry Associations, Voluntary Organizations, ICAI, ICWAI and NASSCOM requesting them to give suggestions/views on existing legal and administrative framework available under the various laws to deal with the menace of generation of black money through illegal means.
(ii) More than 3300 comments on the issue of black money have been received from the public via-e-mail which are being examined.
(iii) Suggestions for improving the respective laws sent by the organizations, as well as gist of useful suggestions received through email, would be compiled and circulated.
(iv) Reminders will be sent to industry and trade associations, ICAI and ICWAI for expediting their suggestion.
(v) Letters have also been issued to Chief Commissioners of Income Tax (Cadre Controlling Authorities), Director Generals of Income Tax (Training), National Academy of Direct Taxes, requesting them to give suggestions/views on existing legal and administrative framework available under the various laws to deal with the menace of generation of black money through illegal means.
(vi) The third meeting of the Committee was held on 23.09.2011. A gist of the suggestions received from various sources, including the public, member agencies, Union Law Minister, etc., was circulated amongst the Members and analyzed.
(vii) It was decided that a draft report shall be prepared and circulated amongst the Members and the same shall be discussed in the next meeting of the Committee.
(viii) The fourth meeting of the Committee on the Black-Money was held on 21st December, 2011 wherein various issues were deliberated upon and the broad contours of the report were finalized.
(ix) The draft report of the Committee under Chairman, CBDT, to examine ways to strengthen laws to curb generation of black money in India, its illegal transfer abroad and its recovery has been circulated amongst the Members of the Committee for their final comments/suggestions, if any.
(x) The fifth meeting of the Committee on the Black-money was held on 21st March, 2012 wherein the draft report of the Committee was discussed and the recommendations proposed to be made by the Committee were deliberated upon.
The Committee headed by the Chairman, CBDT submitted its report containing recommendations on measures to tackle black money to the Government on 29.03.2012 for examination and further action thereon.
7. In order to examine certain suggestions on Income tax demand classified under the categories “Assessees not traceable” and “No assets/inadequate assets for Recovery”, a committee has been constituted by the Central Board of Direct Taxes (CBDT).
The terms and conditions of the committee will be as follows:-
(a) To suggest modalities for utilization of the information available with FIU-IND and the Directorate of Income Tax (Systems) for the recovery of outstanding demand in such cases.
(b) To examine the possibilities of engaging the outside agencies to locate the whereabouts of non-traceable assessees of their assets and also unknown/undisclosed assets owned by the assessees with inadequate assets vis-à-vis the outstanding demand.
(c) To process a reward scheme for informants who supply information about such tax defaulters and which results into collection of the outstanding demand.
(d) To propose a scheme regulating such outsourcing to outside agencies for its administration by the field formation.
(e) To examine the feasibility and methodology of putting the names of chronic tax defaulters in public domain.
The committee shall submit its report within two months of its constitution.
8. As per the direction of the Apex Court a High Level Committee under the chairmanship of Revenue Secretary has been constituted to coordinate multidisciplinary probe in important cases like Hassan Ali by various enforcement agencies. As of now the case of Hassan Ali and cases of persons having account in LGT bank have been discussed by the committee for coordination of investigation/prosecution by Law Enforcement Agencies. The information in respect of cases against Hassan Ali and persons having accounts in LGT Bank is being shared by the Directorate of Enforcement with other Law Enforcement Agencies during meetings of the High Level Committee.
8.1 The Hon’ble Supreme Court of India has passed an order dated 04.07.2011 in the Ram Jethmalani & Other v. Union of India [Writ Petition (Civil) No. 176 of 2009]. In the instant case, the Hon’ble Supreme Court has ordered creation of a Special Investigation Team (SIT) with the responsibilities and duties of investigation, initiation of proceedings and prosecution, whether in the context of appropriate criminal or civil proceedings, relating to cases involving stashing of unaccounted money in foreign banks by Indians or other entities operating in India as well as the cases relating to Hassan Ali Khan group.
The Hon’ble Supreme Court, vide paragraph 49 of the order dated 4th July, 2011, in Writ Petition (C) No. 176 of 2009, has directed that the High Level Committee constituted by the Union of India be forthwith appointed with immediate effect as Special Investigation Team (SIT) and SIT so constituted shall include, Director, Research and Analysis Wing. It has been also directed by Hon’ble Supreme Court that the SIT be headed by and include the following former eminent judges of the Supreme Court:
(i) Hon’ble Mr. Justice B.P. Jeevan Reddy as Chairman; and
(ii) Hon’ble Mr. Justice M.B. Shah as Vice-chairman.
The Government has filed an application in the Hon’ble Supreme Court for modification of the order dated 04.07.2011 and for setting aside the directions given in paragraphs 49 and 50 regarding the setting up of SIT and the consequential orders in relation to this. Arguments were held on the maintainability of the application filed by the Union of India before the Hon’ble Supreme Court. Order in the main Writ Petition No. WP (C) 176/2009 (Ram Jethmalani & others v. Union of India & Others) on maintainability of recall application of the Union of India has been pronounced on 23.09.2011. The Bench comprising of Hon’ble Justice Mr. Altamaz Kabir and Hon’ble Justice Mr. S.S. Nijar pronounced differing judgments, and hence referred the matter to the Hon’ble Chief Justice of India for constituting a larger Bench to hear the matter.
9. Efforts made to obtain information about illicit money of Indian Citizen parked outside: The Government is pursuing all the relevant leads in this regard. Information about Indian citizens having bank accounts in LGT Bank from Germany has already been collected. Similar issues with other countries are also being pursued. In addition, information is requested from various countries in specific cases where the information is needed for investigation/assessment. A series of measures through amendments in the Income-tax Act, 1961, were also proposed to deter the generation and use of unaccounted money, including
a. Introduction of compulsory reporting requirement in case of assets held abroad.
b. Allowing for reopening of assessment upto 16 years in relation to assets held abroad.
c. Tax collection at source on purchase in cash of bullion or jewellery in excess of Rs. 2 lakh.
d. Tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold.
e. Tax collection at source on trading in coal, lignite and iron ore.
f. Increasing the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value.
g. Taxation of unexplained money, credits, investments, expenditures etc., at the highest rate of 30 per cent irrespective of the slab of income.
10. Due to the five pronged strategy and other efforts made by the government in last two financial years, we have achieved substantial success both in getting information of illicit money parked outside the country and in stopping transfer of illicit money outside the country the results are as detailed below:-
10.1 In last 24 months Income Tax Department have collected 7704 discrete items of information from treaty countries containing details of payments received by Indian Citizen in various countries besides information of LGT Bank Accounts. This information is in various stages of processing and investigation.
10.2 Based on the prosecution by CBDT of the LGT bank accounts holders the Enforcement Directorate is also taking further necessary action under FEMA.
10.2.1 Out of the 17 cases referred to the Directorate by the CBDT, statements in four cases have been recorded and further information/documents have been called for by the Directorate from the Income Tax Department. Efforts are also being made to record statements in other cases. The investigations in the 17 cases regarding bank accounts in LGT Bank referred to the Directorate of Enforcement by CBDT are in progress. Efforts are being made by the Directorate of Enforcement for obtaining information/material from concerned Court where prosecution complaints have been filed by the Income Tax Department.
10.2.2 In respect of LGT Bank Account cases, statements have been recorded in two more cases by Directorate of Enforcement. Summonses were issued to eight persons in Mumbai on 01.07.2011. However, none of them appeared but sent letters in reply to summons. One of the persons has claimed that he had been a non resident Indian for the last eight years. These replies are under examination.
10.3 The Government has made more than 175 requests to our treaty partners in case of specific taxpayers in the last Financial Year.
10.4 Government’s sharp focus on mis-pricing, which is one of the main and new method of transfer of illicit funds outside the country has resulted in detection of mis-pricing of Rs.33,784 crore in the last two financial years as against detection of trade mis-pricing of Rs.14,655 crore in last five Financial Years.
10.5 Special attention on cross border transactions and business deals has resulted in collection of taxes of Rs 22,697 crore in the last financial year. CBDT has also raised demand of Rs.11,218 crore in case of Vodafone involving a cross-border deal with a tax haven country out of which tax of Rs.2500 crore has been collected in this month.
10.6 The government has also conducted focused searches to detect unaccounted income of Rs10,649 crore in the last financial year, Rs 8101Crore, Rs 4613 crore and Rs 4160 crore in F.Y. 2009- 2010, 2008-09 and 2007-08 respectively.
10.7 Based on the information received from German Tax Office tax assessment has been completed in the case of 18 individuals. Penalty notices u/s 271(1)(c) of Income tax Act,1961 for concealment of income have been issued in these cases. Prosecutions for tax evasion have been launched in 17 cases (1 person is deceased). CBI and ED have been provided information to carry out further investigation.
10.8 The Directorate of Enforcement initiated investigation in the Hassan Ali case under FEMA/PMLA upon receipt of information from the Income Tax Department, LRs have been sent out to five foreign jurisdictions. Part replies have been received from some of them and further supplementary Letters of Request are also being issued. Supplementary Letters of Request issued by the Designated PMLA Court to the Competent Authorities of Singapore, UAE and Switzerland have been forwarded to the Indian Missions in the said countries through diplomatic channels.
On the basis of investigations conducted so far, Show Cause Notices have been issued to Shri Hassan Ali Khan & Ors. For various FEMA contraventions. However, the Adjudication proceedings in respect of Show Cause Notices have been kept in abeyance in view of an assurance given to the Hon’ble Supreme Court during the course of hearing in writ petition © No. 176 of 2009.
10.9 The Directorate also conducted searches at various premises of S/Shri Hassan Ali Khan, Kashinath Tapuriah, Philip Anandraj and others on 07.03.2011. S/Shri Hassan Ali Khan and Kashinath Tapuriah were arrested by the Directorate under PMLA on 07.03.2011 and on the intervention of the Hon’ble Supreme Court, they were remanded to the custody of the Directorate of Enforcement initially. They were later remanded to judicial custody.
10.10 On 12.08.2011, the Hon’ble Bombay High Court pronounced grant of bail to Shri Hassan Ali Khan in the open court. The Directorate of Enforcement filed an SLP in the Hon’ble Supreme Court on 15.08.2011 against the Order dated 12.08.2011 of Bombay High Court praying for cancellation of bail granted to Hassan Ali Khan and for stay of the High Court Order. On 16.08.2011, the Hon’ble Supreme Court granted stay upto 18.08.2011, which was further extended on subsequent dates of hearing. The Hon’ble Supreme Court pronounced the order on 30.09.2011 cancelling bail of Shri Hassan Ali Khan.
The bail application filed by Kashinath Tapuriah in the Bombay High Court came up for hearing on 15.11.2011 when he sought adjournment on health grounds. The Hon’ble Court ordered the Jail authorities to carry out his medical checkup and submit report to the Court on the next date of hearing on 30.11.2011. Meanwhile, the stay granted by the Hon’ble Supreme Court continues.
The petition filed by Hassan Ali Khan in the Special Court for medical treatment in a private hospital is under regular hearing. Review Petition filed by Hassan Ali Khan in the Hon’ble Supreme Court against the order of the High Court rejecting his bail has been dismissed by the Hon’ble Supreme Court on 19.01.2012. The bail application of Hassan Ali Khan was heard on 03.07.2012 and adjourned to 06.07.2012 and again adjourned to 16.07.2012 for hearing on arguments. Bail application moved by Shri Kashinath Tapuriah stand rejected by the Hon’ble Supreme Court.
Mrs. Rheema Hassan Ali Khan appeared before the Directorate of Enforcement on 28.07.2011, 01.08.2011 and 03.08.2011 when her statements were recorded. Further investigations in the matter are in progress.
10.11 Two Provisional Attachment Orders (PAO) have been issued under PMLA on 30.06.2011:-
(i) Pertaining to Shri Hassan Ali Khan and Smt. Rheema Ali Khan attaching their movable and immovable properties worth Rs. 16.30 Crore. The Complaint filed by the Directorate before the Adjudicating Authority for confirmation of the Provisional Attachment Order passed against Shri Hassan Ali Khan and his wife Ms. Rheema Ali Khan was posted for hearing on 20.09.2011 and against Shri Kashinath Tapuriah on 22.09.2011. The hearing in these matters was adjourned to 28.09.2011. The complaint filed before the Adjudicating Authority for confirmation of the Provisional Attachment Order passed against Hassan Ali Khan and his wife Rheema Ali Khan fixed for hearing on 28.09.2011 was adjourned to 04.10.2011. The case is now fixed for hearing on 22.03.2012.
(ii) Pertaining to Shri Kashinath Tapuriah, Shri Vujay Kumar Mundhra and M/s R. M. Investments & Trading Co. Pvt. Ltd. Attaching immovable property worth Rs.27 Crore.
(iii) It is learnt that on the basis of a complaint of RPO, Hyderabad, the Hyderabad Police has registered on FIR on 17.09.2011 against Shri Hassan Ali Khan for obtaining passport on the basis of false information and documents.
(iv) The Adjudicating Authority has confirmed the Provisional Attachment Order (PAO) passed by the Directorate of Enforcement under section 5(5) of PMLA, 2002. The properties attached through this order include immovable properties owned by Hassan Ali Khan and Kashinath Tapuriah situated in Delhi, Mumbai and Pune, and a number of high end cars owned by Hassan Ali Khan, totally valued at Rs. 45 crores.
(v) A second supplementary Letter of Request has been issued on 19.11.2011 by the PMLA designated Court, Mumbai to the Swiss authorities seeking details of a few foreign exchange transactions of Hassan Ali Khan executed through a bank account in Switzerland.
(vi) Writ Petition No. 2157 of 2011 filed by Mrs. Rheema Hassan Ali Khan for quashing of ECIR registered by the Directorate of Enforcement has been dismissed by the Hon’ble High Court of Bombay on 30.11.2011.
(vii) On an application filed by Hassan Ali Khan, the Special Judge of PMLA passed order on 01.12.2011 that Hassan Ali Khan be given proper treatment by the Jail Doctor, and if necessary, he can be given treatment at J.J. Hospital.
(viii) Bail application of Kashinath Tapuriah came up for hearing in the High Court of Bombay on 02.12.2011 but was adjourned to 07.12.2011. Another application for direction to CMO for proper medical treatment came up for hearing before the Special Court on 01.12.2011 but was adjourned to 15.12.2011. The bail application of Kashinath Tapuriah has been dismissed by the Hon’ble High Court of Bombay on 16.12.2011.
(ix) On the basis of the information passed on by the Directorate of Enforcement, the regional Passport Officer, Pune filed a complaint against Hassan Ali Khan with Maharashtra Police for obtaining Passport by fraudulent means. F.I.R. No. 563/2011 has been registered by the Maharashtra Police on 21.12.2011.
(x) Mumbai Police have filed chargesheet against Hassan Ali Khan and others in respect of FIR No. 28/2008 (Passport matter) booked at Worli Police Station, before the ACMM 29th Court, Dadar, Mumbai on 18.01.2012 vide CC No. 85/PW/12.
(xi) Petition filed by Hassan Ali Khan and his wife before the Appellate Tribunal seeking stay of the Order of Adjudicating Authority confirming the Provisional Attachment Order against their properties was dismissed by the Tribunal on 03.02.2012. Appeal filed by them before the Hon’ble Bombay High Court against the Tribunal’s Order was taken up on 09.02.2012 and was posted for hearing on 15.02.2012.
(xii) At the request of the Directorate of Enforcement, the Designated Court, Mumbai issued Letter of Request on 02.02.2012 to the Competent Authority, Luxembourg which is being sent for execution. Further, the Hon’ble Court issued summons on 07.02.2012 under section 59(1) of PMLA to two employees of UBS, Switzerland, viz., Mr. Peter Willie and Mr. Prabhu Guptara requiring their presence in the Court on any date between 9th to 13th April, 2012. These are also being sent abroad.
(xiii) The Writ Petitions filed by Hassan Ali Khan and his wife before the Hon’ble Bombay High Court against the order of the Tribunal confirming provisional attachment of their properties came up for hearing on 09.02.2012 when the Court ordered that they should not be evicted from their property before the next date of hearing on 15.02.2012. Juridical possession of their property was taken on 14.02.2012. After hearing the Directorate’s arguments on 15.02.2012 to the effect that Writ Petitions are not maintainable in view of the provisions of PMLA, the Hon’ble High Court allowed the petitioners to amend the Writ Petitions within one week with directions that interim order relating to eviction to continue.
11. Announcement in the in the Budget Speech, 2012 of Hon’ble FM. In the Budget speech, the results of proactive steps taken to implement the five pronged strategy outlined during the last year’s Budget, to tackle the malaise of generation and circulation of black money and its illegitimate transfer outside India, were announced including creation of a wide network of DTAAs and TIEAs, flowing of information regarding bank accounts and assets held by Indian abroad, functioning of dedicated exchange of information cell in the CBDT for speedy exchange of tax information with treaty countries, India becoming 33rd signatory of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and establishment of a Directorate of Criminal Investigation in the CBDT.
11.1 The Finance Minister has laid on the table of the House on 21.05.2012, a white paper on Black Money in the current session of Parliament.
Negotiation and Signing of Tax Information Exchange Agreements (TIEA) with no tax or low tax jurisdictions
We have written to 22 prioritized countries/jurisdictions to enter into TIEA. The current status of these 22 requests is as under:
Negotiation completed (7): Congo, Costa Rica, Gibraltar, Macau, Marshall Islands, Monaco, Saint Kitts & Nevis.
Revenue Secretary has already requested Foreign Secretary to expedite the response.
Countries/jurisdictions which want DTAA instead of TIEA(3): Liechtenstein, Panama, Seychelles. We have included this issue in G 20 communiqué.
TIEA signed (5): Argentina, Cayman Islands, Macao Malaysia. Bahrain
Entered into force(7): Bahamas, Bermuda, British Virgin Islands, Isle of Man and Jersey and Liberia, Guernsey.
Broadening of scope of Article concerning exchange of information with DTAA countries
The issue was taken up in 75 treaties and current status is as under:
Negotiation completed(19): Armenia, Bangladesh, Brazil, Indonesia, Kenya, Malaysia, Malta, Romania, South Africa, Spain, Srilanka, Sweden, Zambia.
Approval of Cabinet obtained: Kingdom of Sweden, Republic of Romania, Republic of Croatia, France and Morocco.
Signed: Australia, Norway, Singapore, Nepal, Tanzania, Uzbekistan UAE and, Netherlands.
Entered into force: Georgia. Finland, Luxembourg. Switzerland, Estonia, Lithuania.
No. of countries with whom we are negotiating new DTAA where EOI provision has been finalised (19): Albania, Bhutan, Chile, Croatia, Colombia, Ethiopia, France, Georgia, Hong Kong, Iran, Latvia, Mexico, Mozambique, Senegal, Taiwan, Thailand Venezuela.
Signed: Australia, Colombia, Ethiopia, Georgia, Mexico, Mozambique, Taiwan, Uruguay.
Entered into force: Mexico, Mozambique.
Negotiation underway (17): Austria, Czech Republic, Germany, Bangladesh, Egypt, Korea, Kuwait, Malaysia, Mauritius, Morocco, New Zealand, Oman, Qatar, Saudi Arabia, Sri Lanka, Tajikistan, and UAE.
Under Consideration (9): Serbia, Belgium, Italy, Ireland, China, Kazakhstan, Myanmar, Syria and Turkmenistan.
Countries which have acknowledged our request but will come back later (3): Jordan, Belarus, Turkey.
Countries which have sought revision of other Articles or full DTAA (10): Bulgaria, Denmark, Japan, Poland, Russia, Slovenia, UK, USA, Canada and Mongolia.
Response awaited (15): Cyprus, France, Greece, Hungary, Montenegro, Portuguese, Trinidad and Tobago, Ukraine, Botswana, Kyrgyz Republic, Libya, Philippines, Sudan, Uganda and Vietnam.
Revenue Secretary has already requested Foreign Secretary to expedite the response.