The income-tax department is making a last-ditch effort to lay its hands on the $8 billion allegedly stashed away by Hasan Ali Khan, a Pune-based stud farm owner, who is being investigated by the income-tax department as well as the Enforcement Directorate (ED), which deals with violations of rules governing use of foreign currency.
The department is in the process of seeking clearance from various authorities for issuing a so-called letter rogatory to Switzerland, including a sanction from the home ministry. The letter rogatory, essentially a request for legal assistance, will ask the Swiss authorities to furnish information about Mr Khan’s accounts.
The I-T department this time wants to ensure that the offences it will be charging Mr Khan with would be considered as offences under the Swiss laws. Swiss banks furnish details of a bank account to a foreign government only if the offence committed by the account holder is an offence under the Swiss laws. For example, not filing returns is an offence under the Indian tax laws, while it is not an offence under the laws of Switzerland. However, tax evasion is an offence in both countries.
A letter rogatory is to be issued by the magistrate’s court in India to the Swiss police, which will present it to the authorities in Switzerland. The Swiss court will decide whether the request by the Indian authorities is to be complied with. Ever since the I-T authorities raided his premises in 2007, it has been speculated that the money allegedly deposited by Mr Khan in Swiss Banks in fact belonged to politicians and industrialists and that Mr Khan was only a conduit who facilitated the transfer of the money from India, apparently on a commission basis.
Nonetheless, Mr Khan has been declared as the highest tax defaulter in India with tax dues allegedly amounting to over Rs 50,000 crore. The government, replying to a query in Rajya Sabha in August last, declared that the tax dues, including interest for belated payments, exceeded Rs 70,000 crore.
The Enforcement Directorate, the agency under the finance ministry for exclusively dealing with violations of foreign exchange regulations, had issued a letter rogatory in 2007. The Swiss authorities, after examining the documents submitted to them, had reportedly told the ED that the papers seized from Hasan Ali Khan’s residence and premises, were forged. The Enforcement authorities, however, did not pursue the matter further.