Black money SIT decides to solve tax treaties' secrecy puzzle
Jun 08 2014 , New Delhi
India has signed tax information exchange treaties with many countries, but they typically contain a 'confidentiality' clause which forbids sharing of details obtained through such treaties with other law enforcement and investigation agencies, thus coming in the way of coordinated actions by them.
At the centre of discussion of the Special Investigation Team (SIT) -- headed by retired Supreme Court Judge MB Shah -- are close to half-a-dozen black money cases in which information has been received from a foreign jurisdiction by the Income Tax Department or allied agencies, sources said.
However, this information cannot be shared with any other investigative agency as a strict non-disclosure of information clause accompanies these information exchange treaties, they added.
The SIT, sources said, would look into the possibility of requesting competent courts and the relevant authorities in foreign jurisdictions for permission to share with other agencies the data obtained by the Central Board of Direct Taxes (CBDT) and the I-T department.
The agencies for which the data access could be requested include Enforcement Directorate (ED), Directorate of Revenue Intelligence (DRI), Reserve Bank of India and CBI, so that suspects in such cases can be probed from various angles and under provisions of criminal laws.
CBDT and Income Tax department obtain data from foreign nations and tax haven jurisdictions under Double Taxation Avoidance Agreements (DTAAs) or Tax Information Exchange Agreements (TIEAs).
Officials said that a full-fledged foreign exchange violation and money laundering probe in the LGT Bank accounts case has been slowed down due to restrictions on information- sharing between various agencies.
"The agencies only have access to a limited number of documents in the LGT case and hence the probe is not (progressing at the pace it) should. If the documents are available, prosecution can easily be started in these cases with regard to contraventions in the foreign exchange domain and possibly money laundering laws too," officials said.
India, at present has over 80 operational DTAAs and 40 TIEAs.