Discussion and walkouts in Parliament by Opposition, on black money, have been more dramatic than purposive! - T. N. Pandey - Article published in Business Advisor, dated December 10, 2014 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/

1. Volume IX Part 5 December 10, 2014 3 Business Advisor
Discussion and walkouts in Parliament
by Opposition, on black money, have
been more dramatic than purposive!
T. N. Pandey
Discussion by opposition parties in Parliament on 26th
November, 2014 in Rajya Sabha (RS) and on 27th in Lok
Sabha (LS) has shown a sad and pathetic understanding
of the problems concerning black money by the
opposition parties.
Some members coming with black umbrellas in Rajya
Sabha and some covering themselves with black shawl
in Lok Sabha is more drama than a genuine desire to
find solutions for the issues concerning unaccounted
money of Indians in India and abroad.
Dharnas outside the Parliament cannot provide solution to the problem of
such money. Neither does such a way of functioning in Parliament convey
the right message to the people of the country. Some instances as to how
the opposition made observations on such intricate problem and the way
the discussion proceeded are given below:
2. Opposition‘s case
[i] Initiating a discussion in the RS, Congress Deputy Leader Anand Sharma
said that when BJP was in the opposition, it had ‗misled‘ the country
making tall promises of bringing back black money.
Narendra Modi, during BPJ‘s campaign, had claimed that black money was
to the tune of Rs 85 lakh crore equal to five Union budgets and that it was
enough to put Rs 15 lakh in the account of all Indian citizens, he said,
asking the Government where was the money which BJP had promised to
bring back.
[ii] Both in the RS and LS, Congress and TMC alleged that BJP had ‗sold
lies‘ and misled the nation for which the Government should apologise. This
is a treadmill Government, the Government seems to be moving but in
reality it is doing nothing, Kamal Nath of Congress later said.
Similar views were echoed in LS by the leader of the Congress Party. The
leader of the Congress Party in LS merely criticised the PM Modi for not

2. Volume IX Part 5 December 10, 2014 4 Business Advisor
fulfilling the promise of tackling black money in 100 days and non-credit of
such money in the accounts of citizens. No other suggestion was made by
him.
3. Incidentally, Shri M. Venkaiah Naidu in his statement published in the
TOI of 28th Nov., 2014 has categorically said that the NDA never vowed
black money return in 100 days and said that it was painful for him to hear
from the opposition slogans against the PM. He invited the opposition to
come with better ideas as to how to deal with the black money. Earlier also,
such assertions have been denied by NDA constituents but the opposition
never came out with any concrete evidence to support its statement that
Shri Modi made any such statement.
3. FM‘s reply to the Opposition charges
The FM said in RS that the Government has zeroed in on 427 foreign
accountholders. Of the accountholders identified, 250 have confirmed
holding funds in foreign banks, he said. Sharing details of accountholders
and spelling out steps being taken, the FM referred to an HSBC list of 627
accountholders received by the Government.
The Government, he assured the Upper House, will proactively chase those
with black money and won‘t rest till the last account is identified. But the
names can be disclosed in a prudent and thoughtful manner and it cannot
be a one day thrill. Maintaining that revealing the names of accountholders
at this stage may prove suicidal, he warned that premature disclosure will
help the accountholders because it‘ll prompt countries to refrain from
sharing information.
3.1 The Government, he added, handed over all documents relating to black
money to the SIT, which will submit its second report to the Supreme Court
by the month end. He said more cases are likely to be filed against some of
those figuring in the HSBC list, who are suspected to have illicit funds. We
are on a learning curve. The Government is going to be on the right track
even if it takes extra time. He said the Government is willing to change laws,
if required, to bring back black money.
3.2 Similar statements were made by the FM in LS on 27th November, 2014.
It was reiterated in LS that, to the persons in the list of HSBC, notices and
summons have been sent and proceedings are being initiated in courts.
The noticees are influential persons and disclosing their names at this stage
could be violative of the treaty. He said that this does not mean information
will never come out, but how it will come out. We will file cases and in a
court, information can become public. If we make it public before that, it is

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violation of that treaty. Stating further about the disclosure of names, the
FM said that he will not get evidence and the accountholders will have last
laugh.
3.3 The unconvinced members of opposition parties like Congress, TMC,
JD(U), SP and CPM walked out in RS even before the FM could conclude his
reply.
4. Critique of two days proceedings in Parliament concerning black money
The foregoing account shows a pathetic position regarding the handling of
the problem of black money by the opposition. An enlightened opposition
needs to be a partner with the Government in sorting out the problem,
which is quite grave by giving concrete and constructive suggestions to the
Government so that the remedy for black money malice could be worked
out. It is necessary to rise above the party levels in this matter in national
interest.
No purpose has been served by merely harping on an (alleged) statement of
the PM, which has been denied by a responsible member of the NDA
Government. There could be, if at all any such statement has been made,
mis-appreciation of the gravity of the problem by PM. There have been many
statements in the past regarding GDP growth, per capita income, persons
below poverty line by the Planning Commission and the Government, but
targets mentioned have often been missed. A PM of UPA Government is
reported to have said, after conclusion of elections, that he will reduce
poverty in 100 days [i] but such target was impossible to reach and never
reached. But the UPA Government never resigned nor offered apology for not
reaching the targets declared.
Further, election victory is not merely on such statement, if made. There
were many other aspects on which the voter relied not merely on black
money repatriation. Hence, it cannot be alleged that the election has been
won by making false promises regarding black money.
4.1 Further, what needs to be seen is the bona fide of the person making
such statement. Did PM made such alleged statement with mala fide
intention? May be, he misjudged the gravity of the problem before elections,
the complexity of which was realised after he came to the Government. But,
no mala fide can be attributed raising voices for the resignation of the
Government. It is tantamount to making a mountain of a mole hill. Such
handling of the problem is shocking to the common man in the country.
4.2 It cannot be said that the Government has been lame on this point. It
has initiated a number of steps for taxing and repatriation of black money.

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These are well known and their reiteration would make this write up
unnecessarily long. It is said with respect that instead of wasting the time of
Parliament merely by accusing and making criticism for criticism‘s sake, the
opposition should have mentioned the new steps to be taken, lacunae in the
action initiated, and give some positive suggestions, which could have
provided real solution to the problem.
5. Government should not get unnerved by the opposition‘s meaningless
accusations
The Government seems to have been somewhat unnerved by the criticism
regarding its actions concerning black money. This view gets support from
report appearing in the Economic Times. A write up appearing in the
Economic Times of 4th Nov., 2014 shows that the Central Government may
resort to complete the assessments ex-parte [u/s 144] [also referred to as
best judgment assessment in the cases of overseas accountholders, who do
not cooperate or appear before the Income tax authorities]. There is no
ground for taking such action in a hurry.
5.1 Action u/s 144 for ex-parte assessment has to be in accordance with the
legal requirements in the I.T. Act and can be made only in the following
circumstances:-
5.2 Serving of proper notice and failure to comply with the same are
prerequisites for a valid assessment u/s 144.
5.3 [a] failure to make a return required when no return or a revised return
has been filed u/s 139(4) or section 139(5);
[b] failure to comply with all the terms of a notice u/s 142(1) calling for
production of specific books or documents or for giving specific information
or total wealth statement or for furnishing a return of income, etc.;
[c] failure to comply with a direction u/s 142(2A) to get accounts audited by
an auditor nominated by the Chief Commissioner or Commissioner [upto
31.03.1988, Commissioner) and to furnish the audit report thereof; and
[d] failure to comply with all the terms of a notice u/s 143(2) by personally
attending the hearing or, as the requirement may be, by production of
evidence, etc., in support of the return earlier filed.
5.3.1 The section enjoins that on any one or more of these defaults
happening the AO after taking into account all relevant material which he
might have gathered shall, after giving the assessee an opportunity of being
heard, make a best judgment assessment and determine the sum payable

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by the assessed or refundable to the assessee on the basis of such
assessment. The provisions are mandatory [CIT v. Segu Buchiah Setty (1970)
77 ITR 539 (SC), Prabhat Mills Stores Co. Ltd. v. CIT (1966) 59 ITR 197 (Cal)
and CIT v. Laxminarain Badridas (1937) 5 ITR 170 (PC)].
The first proviso to section 144(1) enacts and enjoins upon the AO for the
purpose of giving an opportunity as envisaged in main section 1444(1), to
serve a notice calling upon the assessee to show cause on a date and time to
be specified in the notice why the assessment should not be completed to
the best of its judgment.
Non-issurance of such notice was held to vitiate the best judgment
assessment [Padam Chand v. CST (1986) 62 STC 195, 196 (All). Also see
Makhali Wine Store v. CST (1987) 67 STC 416 (All)].
5.3.2 The fact that prior and valid notice has been served has to be proved
by the I.T. Dept [see 118 ITR 454 (Cal)]. Also opportunity to show case has
to be real and effective.
5.4 Further, there could be the issue relating to jurisdiction namely who
should issue and serve the notices and the places where these should be
served.
5.5 There is a provision in law that if a notice cannot be served in person or
through affixture, the same could be published in official gazette/
newspapers. But this will need the disclosure of the names of the assessees,
for which the Government has preached patience.
Also, if all the legal requirements concerning an ex-parte assessment are
complied with, there could be a problem concerning tax collection, which
the tax department is facing in the cases like those of Harshad Mehta and
Hasan Ali. Thus, the Government has to proceed with lot of caution before
initiating action u/s 144. It should not resort to such action under pressure
and in haste.
(T. N. Pandey is Former Chairman, Central Board of Direct Taxes)
The Government has to proceed with a lot of caution before
initiating action u/s 144. It should not resort to such action
under pressure and in haste.