Rs 5 cr for laptops! I-T dept is right in penalising Abhishek Manu Singhvi
Singhvi, of all people, with his deep knowledge of law had to learn the hard way that mercy need not always be the leitmotif of the Settlement Commission's orders
The Income Tax Settlement Commission (ITSC) has always had its detractors right from the common man to jurists. The tax administration itself expressed its frustration and anguish last year when it found crooks were preempting its hard work and painstaking efforts by knocking at the doors of the ITSC.
The ITSC is back in news this time round, ironically for not giving the relief that was obviously expected. Congress spokesperson Abishek Manu Singhvi entered its hallowed if secretive portals when he found ground slipping from under his feet - Rs 5 crore paid for laptops raising the eyebrows of tax sleuths.
The tax administration apparently found this to be a case of over invoicing and its concomitant kickback. The ITSC, which has hitherto been suspected to be protecting crooks in vindication of what Justice Retired Krishna Iyer of the Supreme Court had said in his bombastic style - its beneficiaries were ordinarily those whose tax liability was astronomical and criminal liability perilous - perhaps had a point to prove and live down its reputation of playing ball with the crooks.
It gave no quarters to him and slapped an order to pay up Rs 56 crore. Singhvi for all one knows must be ruing his decision to have knocked at the doors of ITSC. He has, however, got a stay from the Rajasthan High Court.
The biggest attraction for crooks is the power granted to the ITSC to arrive at compromise behind closed doors and grant immunity from prosecution under the direct taxes laws.
Mercifully, its freewheeling powers were clipped in 2007. It could until then grant immunity from prosecution under any central enactment. Mercifully, too, the farce of making clean breast before the commission repeatedly has been stopped with effect from 2007 - an assessee can unburden before the ITSC but once in his lifetime.
But still the ITSC is an anachronism in a milieu where transparency is the buzzword. It smacks of a quasi-amnesty scheme that can be availed by one once in his lifetime. It is reviled for the same reasons one reviles tax amnesty schemes with implications of mollycoddling the crooks and deviants.
Indeed all scheme of compounding whether done by the Sebi or the Ministry of Corporate Affairs smack of something hush-hush and wink-wink-nudge-nudge consummated behind closed doors.
Sooner such powers are abolished the better. Justice Iyer's acid comments - the settlement scheme proceeded on the assumption that composition and collection of revenue from tycoons is better than prosecution of their tax related crime - should alert the policy wonks to the dangers of settlement and compounding especially when juxtaposed against the dubious possibilities of abuse by the officialdom.
Income tax raids can be frustrated from being carried to their logical conclusion by offering to pay up Rs 50 lakh or more in return for plea bargain, as it were, before the ITSC.
Parenthetically, it may be pointed out that Singhvi's assertion that the ITSC overstepped its jurisdiction while slapping a heavy penalty on him is not right. To be sure, subject to good behaviour, the ITSC has the power to grant absolution to the one making confession and protect him from penalty and prosecution under the direct taxes laws. But that is purely discretionary.
In fact, one could not have expected this large-heartedness in the instant case because it has apparently not been impressed by the plea of honest mistake.
Plumping for settlement could recoil because the ITSC has the power to reopen past assessment in a manner of exhuming the dead skeletons. Such digging of the past can embarrass the applicant no end. Still he knocks at its doors taken in by the surface impression that settlement is all about mercy.
Singhvi, of all people, with his deep knowledge of law had to learn the hard way that mercy need not always be the leitmotif of its orders.
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