Interview: Vishwa Bandhu Gupta

60 MINUTES
"VDIS was a criminal abuse of the system"

The controversial Additional Commissioner of Income Tax (Delhi), Vishwa Bandhu Gupta, says that criminals charged under the Indian Penal Code and the Narcotics Act were able to exploit the loopholes in the VDIS. Excerpts from an interview with BT's Ranju Sarkar.

Q. What is the point you are making about the Voluntary Disclosure of Income Scheme (VDIS)?

A. If you go through the finance bill pertaining to the financial year 1997-98, there's only a paragraph on the scheme. Then, somewhere down the line there were disputes pertaining to old silver, gold and diamonds being disclosed on affidavits and stamp papers. Certain income tax commissioners wanted proof before accepting such claims on stamp papers and affidavits. Suddenly a circular arrived from the Central Board of Direct Taxes (CBDT) that no commissioner shall ask any question, and whatever the declarant mentions on a Rs-2 stamp paper shall be binding on the commissioners.

Nearly 75 per cent of the wealth declared under the VDIS comprised silver, gold, and diamonds, whose value would run into, at least, Rs 1 lakh crore. I had said that the circular may be binding administratively, but legally it was questionable because under the Income Tax Act, the administrative instructions cannot supersede the commissioner's investigative powers. The Act is not a part and parcel of the (finance) ministry. Within two days, I received a letter from the CBDT expressing displeasure.

But the scheme, as it was introduced, was validated by Parliament?

Yes, but the scheme was validated at the current taxation rates. If you remember, around Rs 10,500 crore was collected from nearly 1 lakh declarants under the VDIS. But, at the rate of 35 per cent tax, the figure should have been Rs 35,000 crore. This happened because various tax-payers paid at various rates and got away with it. (While those who declared gold and silver, which had been purchased over a decade ago, paid only the wealth tax ranging between 2 and 9 per cent, those who declared incomes earned within a 10-year period paid an income tax of 35 per cent.)

The second aspect of the abuse of the scheme was that criminals charged under IPC, TADA, and Narcotics Act filed declarations. Take Romesh Sharma's case. He had never been a tax-payer. But he declared Rs 51 lakh under the scheme, which included a helicopter valued at Rs 12 lakh! It was accepted by the income-tax department. And when Sharma was arrested a month later by the Central Bureau of Investigation and Delhi Police, they claimed that Sharma's wealth was approximately Rs 500 crore.

When did you discover the criminal malice?

During the course of the investigations conducted by me on Romesh Sharma. I have conducted an extensive investigation on him-before attaching his houses, properties, helicopter, and everything.

How many writs do you plan to file?

What I am saying is that loopholes have been abused by certain foreign agencies or some underworld people. This writ has got to do with the fact that criminal mafia appears to have a very strong hold over the bureaucracy in this country. Therefore, I want the court to intervene. Then there will be a Public Interest Litigation filed against the distortions of Article 14, concerning only the VDIS, which need not be filed by me; and there are other groups interested in filing it because the scheme discriminated between an honest tax-payer and a dishonest tax-payer. And, in the third writ, I will be questioning my suspension order because only two grounds have been cited for it-''your conduct has been unbecoming of a government servant'' and ''your continuance in the office of the additional commissioner of income-tax is likely to seriously subvert discipline in the government''.

But I am mainly concerned about the first one. My faith as an investigator has been completely shaken. The criminal hold over the Indian administration cuts across various (political) parties. It's not confined to one party. There is conclusive proof since I know exactly what was recovered...

What kind of criminal malice did you discover?

I have discovered that several important politicians were on the payroll of Indian and foreign agencies. I would not like to name them. When I say important, I mean people right up to the top. These politicians hail from different parties, and as a result, irrespective of who came to power, the agencies always had a man there. A clever gameplan.

Do you have sufficient evidence to prove a criminal malice?

I am a law enforcing officer. I won't say anything in court that does not pass the legal test. The Income Tax Act is a quasi-judicial act, and not an administrative one. I have been in the profession for 24 years, and I know what constitutes evidence. I would request the judge to go through it and reach his conclusions.

But the VDIS scheme itself provided for non-disclosure of names or the source of income...

No way. You read the bill. We have to go by the bill that was passed by Parliament. I have gone through the provisions of the bill. One can't build in new provisions later.

So, was the CBDT circular unwarranted, since they came in after the scheme was formulated?

The CBDT circular was unwarranted and malafide. It was withdrawn in the closing stages of the scheme. But, in between, all the declarations under the VDIS had been regularised. The controversy began after my television interview.

How would you justify disclosing the names of those who declared their assets under the VDIS?

I stand by my statement that a former Indian cricket captain made a substantial disclosure running into several crores of rupees under the VDIS. And I was talking in the context of the Prevention of Corruption Act, and in terms of black money. I wasn't talking in terms of the hugeness of the declaration.

Considering that the scheme provides for non-disclosures, can you justify even indicating the name?

No, I never named anybody. No individual names were taken. Certainly, it was mentioned that a former Indian cricket captain disclosed his asset, and I stand by that.

Will you be able to defend it legally?

Yes, that's justified. When a crime takes place, it's my duty to say that a crime of this nature has taken place. And certainly, I will be able to legally defend that.

But the name of a person who has voluntarily disclosed his income should not be made public until it can be proved that he or she violated a provision of the IPC...

I can't do it. You are correct.

On the former Indian cricket captain's disclosures, what provisions allow you to place such information in the public domain?

It is any government's policy to fight corruption and criminal activities. And it is incorporated in the VDIS.

You have mentioned that N.K. Singh, the former revenue secretary and now secretary in the Prime Minister's Office, is guilty of criminal misconduct in the VDIS.

I am only saying that his complicity lies in issuing the circular.

Can Singh be pulled up for his role?

That is for the courts to decide. It's not A vs B. Both Singh and I have gone on record with our statements. I will move the court and will allege in the writ that it was a criminal misconduct.

But was the circular issued by Singh or CBDT?

In the finance ministry, a particular file goes through various levels. This particular circular was issued with the knowledge and concurrence of the revenue secretary, and the CBDT. But some officials may have a made a dissenting note.

But, wasn't it a CBDT circular...

Yes, officially, it was a CBDT circular. But like in the case of the Mauritius trusts issue, it said that no company shall be investigated.

In a recent television interview, you expressed displeasure at the functioning of the government. Was there mismanagement with respect to the implementation of the VDIS?

Mismanagement is a small term. That was criminal abuse of the system.

Could you elaborate on that?

Something nasty happened. The matter has to be investigated. How did it happen? Under what circumstances did it (the circular) come through? And who approved the circular? They have to be questioned.

Is your current suspension linked to the investigation that you launched against the Vishwa Hindu Parishad (VHP) in 1990?

I think both the issues are linked in parts. Because a small section of the Bharatiya Janata Party (BJP) leadership is still not reconciled with my investigation against the VHP, and the bureaucracy feels overwhelmed by the political leadership. Whosoever is the master, the bureaucrats just become like dogs. I am sorry to use these words, but I can't find a better expression.

To what extent did you proceed with your earlier investigations?

They were scuttled but they were revealing. I questioned VHP's status as a charitable trust. Why should they not be prosecuted for not maintaining financial accounts? And I was removed for making those queries. The charitable status still exists. That shows exactly how powerful the political parties are. VHP has at least half a dozen bogus fronts. I have documents in my possession. The VHP is operating through fictitious trusts that don't exist.

You have been transferred so many times. How do you feel?

I feel frustrated. I have been transferred frequently despite the CBDT policy that states that no transfers can take place in less than five years. We have reached a situation where reforms can't happen, till the entire administration is cleaned up.

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