What Arvind Kejriwal has revealed so far about the 700 Indian accounts in HSBC Switzerland is the tip of the iceberg. The I-T department and therefore the Congress know much more. Here is the proof from a Moneylife Foundation seminar. We suspect Kejriwal knows that the I-T has all the details and is daring the government to sue him, which will nail the Congress’ lie

At a Moneylife Foundation seminar on 13 December 2011, one of India’s best-known tax experts, Anil Harish, explained at length the consequences of the hacked list of 700 Indian bank accounts at HSBC Geneva, handed over to the French government.

What is remarkable about Mr Harish’s talk is that a lot more about the aftermath of that I-T investigation was already in the public domain, than has been revealed by India Against Corruption (IAC) on 9th November.

What comes out clearly from Mr Harish’s talk is this:
 

1) That the list of 700 persons waved by Arvind Kejriwal and shared with the media is genuine. And, as Mr Harish says in his talk, the account holders who were called in for the investigation would confirm that the details were only accurate and people were advised not to lie and deny the facts. Instead, many found a legal way around the problem.

2) Mr Harish says the money stashed abroad was in individual accounts, in corporate accounts and in trusts. Some were accounts of resident Indians and others were of non-resident Indians (NRIs). The Tax department chose to raid those who were residents with Geneva accounts in HSBC. Mr Kejriwal says only three were raided and all the residents he named in his list were apparently not touched. Those who were NRIs were only called for questioning.

3) Consider the accuracy of the list and how much the I-T department already knows. Mr Harish quotes the example of one NRI client who had been warned to give truthful answers. The officer asked if the person had accounts overseas. He said yes, as an NRI you need overseas accounts for business. He told the tax officer he had accounts in the US, UK and Geneva. When asked how much money he had in the Geneva account he said $2.5 million, at which time the officer politely corrected him and said it was in fact $2.4million—because he already had all the information from the HSBC list.

4) It is hard to believe that smaller accounts in the list were 100% accurate and details of the big fish were wrong!

5) In fact, Mr Harish, in the interactive session, advised people not to lie, because the tax authorities had all the exact details.

6) Clearly, contrary to Abhishek Manu Singhvi’s claims on television, the Income Tax department has full and complete information. It can act; it does not need a complaint to be filed. And since when has the I-T department waited to act only on a complaint?

7) Clearly, contrary to Abhishek Manu Singhvi’s claims on television, the Income Tax department has already started an investigation based on the list and decided to go slow with it.

Based on this proof here are some obvious conclusions:
 

1. Mr Kejriwal, is a former joint commissioner of Income Tax whose wife is still in the government. He will be able to pin-point exactly which units and officers were in charge of this investigation. But then, it is not Mr Kejriwal’s job to do the work of government. It is the government that needs to account to the people of India, what action has been taken on the 700 names and which few people were targeted for recovery. In fact, the tax returns of some of the big names may also yield some clues. As Kejriwal and Prashant Bhushan correctly say, it is now for the government to explain to us and to the Parliament what action was taken in each of the 700 cases.

2. Arvind Kejriwal is correct when he says that only a few people were selectively raided. But Mr Harish’s talk explains how and why this was done. He says that those who were resident Indians were raided. Those were Non-Resident Indians (NRIs) were only called in for questioning and many of the accounts were in the names of corporates and trusts, which, as the video reveals, dealt with the issue differently.

3. Mr Harish’s illuminating talk clearly shows that all the 700 accounts need not have been dubious. He also indicates that many of them found clever and ingenious ways to set things right. Others had accounts reopened to pay up the tax and escape liability. The line of questioning adopted by the tax authorities was also explained in detail. He said the key was whether income had emanated form Indian transactions and operations or overseas businesses.

4. The final part of Mr Harish’s talk is also very interesting. He shows how tax evasion is not unknown in the developing world and the US. Mr Harish explains in detail the US amnesty scheme which allows people to avoid prosecution by paying up a stiff penalty on a one time basis. But then, the Indian system works for tax evaders and we have had so many amnesty schemes over the 65 years of independence, that the Congress government in its previous stint at power has assured the Supreme Court that there will be no more amnesty. This is a trap that corrupt policy makers had created for themselves, while making no attempt to check the proliferation of black money.

Clearly, there is a lot more that the I-T department knows which it is possibly trying to bury. There is a lot that Mr Kejriwal knows which he possibly trying to keep with himself as a matter of tactics. And the Congress is plainly lying when it acts ignorant about the details of these 700 accounts.
 

To read yesterday’s coverage about Arvind Kejriwal expose, click here.
 

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