From Surat to Pune, Kolkata to Chennai, Bengaluru to Mumbai, and Chandigarh to Delhi, the Income Tax department, the Enforcement Directorate, the CBI, and state police are raiding shops, homes, warehouses, offices, bank lockers, moving cars and aircraft to seize cash, gold and property papers. As I watch bemused at the dozens of raids that our overworked officials have been conducting, racing against time before the clock winds down on 31st December, running around like headless chickens to catch all the kaladhanwalas here, there, and everywhere, and endlessly begging through costly ads on TV that you should pay your taxes and not deposit money illegally in other accounts, being a simple-minded sort of person who does not understand the intricacies of government and the compulsions of politics, only one question comes repeatedly to my mind, ‘If this was the best way to catch black money hoarders, why could the Prime Minister have not done this from the very first day he took office, when he enjoyed such enormous goodwill, as eradicating black money had been the principal plank of his election campaign and the entire country was in agreement with him? Why did it take him two and a half years and why did he have to put us all through the pain of demonetization to flush these so-called black sheep out?
Did he not know who were the likely candidates whose heads he could hold up to the crowd and place on a stick in the public square to satisfy the public’s blood thirst, a thirst which he had ratcheted up with his rhetoric?
Would these villains be the same ones who were being caught in the net now? A sand miner in Tamil Nadu, a Chaiwala in Gujarat, a lady doctor in Andhra Pradesh, a real estate developer in Bengal, and a tailor somewhere else? Why were they even catching people with Rs 2 lakh or five lakh in cash? Were plain vanilla tax evaders the only ‘beimaan’ they could find? Were they as corrupt as the drug traffickers, the human traffickers running prostitution rackets, the bootleggers, the gold smugglers, the hawala traders, the bribe-takers, the bribe-givers, the various mafia groups looting the country, the politicians who launder money through corporate groups, those whose shenanigans run into the millions and billions? Where were the people who had made their ill-gotten wealth by squeezing the public and betraying the trust placed in them by taking undue advantage of their positions – the greedy taxmen, the corrupt bureau of investigation, the greedy policeman, the opportunistic civic officials and bureaucrats, the colluding judges, the on-the-take ministers, whose history and ongoing antics were clear to anyone who took the trouble to find out?
Our taxmen did wake up rather late, as they conducted some raids in the initial days of demonetisation against some small merchants, money exchange shops, jewellers and other small fry, after which they seemed to have quietly stepped back after instructions from on high that they shouldn’t aggravate the public too much, especially the core BJP supporters of small businessmen , and not a tweet was heard from them until mid-December, when they suddenly became hyperactive again after it was revealed that most of the demonetized currency had returned to the system, which rendered the demonetization drive of the PM completely meaningless, so the government suddenly went into overactive mode, to prove that black money hoarders were being caught left, right and centre and this was the principal benefit of demonetization. The prime Minister and his advisors are gravely underestimating the public’s intelligence if they believe that such showmanship will convince the people that all the generators and benefiters of black money have been caught, and the principal reason for them being flushed out now is the Prime Minister’s effort to smoke them out through demonetization.
Everyone knows that the big fish have all slipped out of the net, and those small fry who have been trapped were just plain unlucky or the victims of personal or political vendettas? Is this sort of witch-hunt, this atmosphere of naming, blaming and shaming, this class divide being created which could one day result in a class war, what we expected of our Prime Minister when we elected him to office with such great hope for our economy and trust in his ability to become the CEO of the nation? But as the days and months rolled by, the Prime Minister was unable to rise above party interests and put the interests of the nation above all else. He only seemed to act with an eye to the next political campaign, with many like Swach Bharat losing steam midway, or the next state election round the corner. He seemed to be like a small fish set adrift in a big pond, thinking in pennies instead of pounds, and though he did put the fear of God into bureaucrats against making even the smallest misstep and expected that ministers and civil servants would emulate his personal code of rigid honesty and rigorous adherence to the rules, it only succeeded in paralyzing most of them into a fearful inertia. The industrialists and others who had brought him to power in the hope of a more forward-thinking and proactive government, by generously donating to his party’s coffers, made the right noises of praising his integrity and his vision etc, but privately seemed to be in despair that the Prime Minister displayed little imagination or boldness, more interested in being proper or correct than taking any of the big, insightful measures to fast forward the economy that they had anticipated, concentrating only on people-pleasing measures, his eye always firmly on public opinion, afraid to take a step wrong so that he faced any backlash from the public.
There was great anticipation that the Prime Minister would do away with the tax measures imposed retrospectively by the then Finance Minister and now president, Pranab Mukherjee. Nothing of this sort was done, it was conveniently left to the courts to decide. The salaried and business classes had great hope that the income tax regime would be simplified, and taxes slashed so that many more people would gladly start paying taxes and they would not be constantly squeezed for more and more by some dishonest IT officials, who arbitrarily summoned them several times a year even though they were the 1 per cent of the population who dutifully fulfilled their responsibility, and abided by the laws of the nation.
The Prime Minister has gone about this entire exercise in reverse. What elation and tremendous sense of excitement he would have created in the country if he had slashed the tax rates and then invited the entire nation to file income tax returns, whether a person earned Rs 10,000 a year or Rs 1 crore. He could have said that even rich farmers and other exempt sections such as political parties would also have to be included in the net, and even those earning less than Rs 10,000 would have to file a declaration yearly to that effect.
If the Prime Minister was still not satisfied then he could have started concerted tax raids across the country with the help of the IT department, CBI, ED, and any other arms of the law he saw fit and done it on such a scale that it would have put the fear of God into people. After that, he could have offered a tax declaration scheme for offenders but with a penalty of only five or 10 per cent, so that people would have been only too relieved to hand over their hoarded wealth for such a small price. Many would have come into the income tax ambit without the pains of demonetization.
The Prime Minister has quietly let it be known to TV channels that 70 per cent of the IT raids being conducted and the money hoarders being caught now is mainly thanks to the efforts of the PMO. Supposedly, informers prefer to directly call the hotlines at the PMO rather than inform income tax officials of their suspicions about black money hoarders, who they claim to have certain knowledge of. The PMO says none of the claims made by these anonymous callers have ever proved wrong. If that is the case, what stopped the Prime Minister from launching such a drive to encourage whistleblowers earlier, without creating the spectacle of demonetization?
The IT department and the PMO as well as office of the Revenue Secretary are constantly haranguing already harried income tax officials with names of new scapegoats to go after the moment they get a lead. They also ensure that TV channels and newspapers immediately get information about these raids, and the TV cameras arrive almost on the heels of the taxmen, (obviously PMO has instructed IT department to have media people present during these raids), and even before a formal list is handed out by taxmen about what has been recovered in such raids (which by law should remain confidential as not all property papers, jewellery and cash in a person’s possession is in itself illegal per se, and should be matched with his income tax returns to see if it is unaccounted wealth), often very vague and overblown figures about crores in cash and jewellery is proclaimed within hours by the media though it may often be far from the truth.
If the PMO has already declared these people guilty without any investigation and their anonymity need not be maintained and their so-called sins can be repeatedly displayed on TV so that the Prime Minister can save his own face, he could have played this name-calling and blame laying game earlier on TV too over the last couple of years, without giving the excuse that it was demonetization that was causing the sins of these people to be finally discovered. Also, the Revenue secretary is using his own channels of information, be it leads through banking channels, emails and phone calls to the IT department from informers to digging up old leads from the Enforcement Directorate, and information received from vested interests like cops and politicians who want to teach certain individuals a lesson. All these tactics could also have been applied earlier. Many others would have given up their fight without waiting to be raided as well and surrendered their crores to the taxmen.
Finally, if the PM still felt that no one in the targeted group was cooperating, he could then have gone for demonetization, that too gradually, first demonetizing the 1000 rupee note, and if results were not satisfactory, then, and only then, targeting the 500 rupee note after some time.
But no, the Prime Minister did nothing of the sort, preferring to maintain the status quo ever since he came into office. As the leader of the nation, he did not want to cause unnecessary upheaval, which is as it should be. He wanted to retain the goodwill of the well-to-do class, after all, they were the main donors to his party during elections. But the desperation to stay on in power is so strong, such was the burden of being Narendra Modi and carrying the party alone on his shoulders and taking the brunt of the people’s huge expectations his 56 inch chest, so imperative that the BJP come back to power for a second term for the first time ever in its history, and so essential to winning key state elections round the corner towards this end, that the entire nation could be held to ransom to satisfy this lust for power.
The economy was stagnating and if sufficient funds were not available in the next two years to implement various yojanas and pet projects of the Prime Minister, be it through squeezing black money out of the system which the government could then acquire for itself through the RBI or raise more taxes by bringing many more people into the net so that a sudden spurt of growth could be visible in the final months and year of this administration, it was all good, all for a higher purpose, not only for the people but also for his party, which was after all his mother, his father, his only family, for whom he was willing to bet everything.
Never mind if it was illegal and would put enormous powers into the hands of a group of people who are not famed for their honesty and integrity. The Finance Minister claimed in an interview recently that the IT officers were impartial and only investigated tax anomalies thrown up by their software. Nothing could be further from the truth. Though there are honest income tax officers, many are unable to function because of a cabal that exists in this department. No effort has ever been made to make these officers accountable for their actions and very little action has been taken so far. If lack of proof is the reason, in this age of CCTV and hidden cameras and informers calling hotlines, many ways of trapping the renegades can be devised. Nothing has been done to strengthen the whistleblower's act so that it is the bribe taker and not the bribe giver who is punished.
I will give you a small personal example. In previous articles, I had mentioned the words corrupt taxmen a few times as I could not or did not wish to find a euphemism for the same. Immediately after their publication, I received an income tax notice summoning me to explain a bank transaction of Rs 5 lakh or so made in 2009-10. As tax files can remain open only for seven years, this was grazing the outer limit of this cut-off. Does the Finance Minister believe that this was thrown up by some software? What was this software doing for the last seven years, and what were the IT officers doing, sleeping? Don’t they have enough on their plates right now that they are querying a seven or eight-year-old transaction and asking for all papers from this period, which I have to desperately scrabble about for as I have no clue about this transaction after so long, as IT department has not bothered to specify which particular transaction they find suspicious? It is not the first time the IT officials have harassed me, though they also deigned to send me a certificate putting me in the silver category for paying high taxes, God alone knows what that stunt was for. They repeatedly summoned me for successive years for the same transaction, money bequeathed to me by my mother from her post office and bank accounts in which I was the nominee, upon her death. These were all transferred by cheques but each year my chartered accountant had to dig up my mother’s death certificate and the same bank account and post office passbooks to prove what we had already said in the past years.
Does this vindictive software only throw up certain names and the same transactions year after year? We all know what those officers really wanted. The more tax you pay, the more open you are to coercion. It is a mystery that while they harassed me unrelentingly on this they never once questioned me on any transaction in 20009-10 before this current summons. But as a journalist, I can at least raise my voice.
Imagine what power these people will have over housewives and the like who will have no papers to prove that the lakhs they have deposited in their accounts after demonetization are honest savings accumulated over many years. Won't they all be terrified out of their wits and beg the taxman to look the other way in return for a consideration? Should everyone have to wear secret cameras now when they visit the income-tax office and put their experiences on youtube to protect themselves from further harassment?
Recently, a huge amount of gold was found missing from the Customs and Excise vaults, gold seized by Customs officers, about 130 kgs from across the country. Imitation gold was found to have replaced the gold ornaments and other valuables and it was only discovered when the items were produced in court. Can you imagine the scale of deception that can occur in the vaults of the Income tax department where huge amounts of cash and gold are kept? Who will guard these guardians of our morality and possessions?
Even taxmen privately admit that they are being run ragged by the Narendra Modi government and the motivated and pointless hounding of certain tax evaders when millions of others are allowed to get away scot-free. IT Official orders are rarely issued written orders by the Revenue Department of the Finance Ministry. Instructions are summarily issued over the phone from the PMO and Revenue Secretary Hasmukh Adhia to members of the Central Board of Direct Taxation (CBDT), who in turn transmit them to the Director-General of Income Tax, who then verbally directs his senior officers to produce results and also ensure these seizures are immediately shown on TV . Serial numbers on the notes seized often reveal that they are not in “long series” and have different serial numbers, and therefore may not have been procured by illegal means.
IT officials then have to work round the clock preparing inventories running into thousands of pages of the seizures made, so that they can be produced in a court of law when needed. IT officers across India are under tremendous pressure to raid and seize” cash, be it cash seized from cars or at airports, etc, whether in the old or new high denominations, and if they can’t find sufficient cash, they must seize jewellery and property papers by forcing those raided to also open their lockers (though the finance minister had earlier claimed no lockers would be targeted), and then add up the value of the jewellery and property seized to declare the total haul as a significant amount, without separately mentioning the cash component . Officials say many cash seizures are illegal, as there is no law prohibiting the possession of cash, especially as the Narendra Modi Government has given all defaulters until March 31, 2017, to declare their untaxed wealth to the RBI in return for a penalty or to deposit all demonetized notes in banks by December 30. How can the IT officers prove that one person had held on to his cash stash instead of depositing it in the banks so that he could launder it through money traders, while others were keeping it to declare to the RBI under amnesty scheme or to take to the bank when the queues got smaller? They are of the opinion that the sudden about-turn by the government asking that more than Rs 5000 in cash not be accepted by banks after December 15 without a proper explanation was so that banks could then inform RBI who were the customers who had come to deposit large amounts of cash, and these people could then also have been raided and their money seized and held up to TV cameras.
They ask what is the use of making examples of only a few individuals, many of who can drag the case to court? IT officers have often been at a loss under which law they should book the people raided, except for the fact they were carrying demonetized notes or large numbers of new notes, though they could have withdrawn them legally from multiple bank accounts. For example, the Principal Secretary in the Tamil Nadu Government, Ramamohana Rao, who was raided recently just after the new Chief Minister of Tamil Nadu personally visited Narendra Modi in Delhi to ‘discuss’ various matters, and kept under house arrest by CRPF officials, had only Rs Rs 1,12,320 of cash in his house. The rest of the seizures were a few grams of gold jewellery and silver idols, etc. Property papers and cash was actually seized from his son’s house but it was all portrayed as recoveries from the same raid.
Did the PMO only have information on one bureaucrat in all of India, that too the Principal Secretary in faraway Tamil Nadu? Who gave it this information and did what was recovered tally with the information given and was it far in excess of the Principal Secretary’s income. Could his son not have income separate from his and that too, far in excess of his father’s?
One reason for this flurry of raids besides the publicity bonanza that it could bring the Prime Minister was the fact that if the cash holding was not voluntarily declared, a penalty of 85 per cent could be imposed on it, but those voluntarily giving up their money only had to pay 50 per cent in tax and penalty. So all the seized amounts could illegally have 85 per cent confiscated, dishonouring the December 31 deadline for bank deposits and the RBI deadline of March 31 for all defaulters to voluntarily submit their cash.
The IT department, with little more than 6000 officers on its rolls, simply does not have the manpower to investigate crores of Indians who have deposited demonetized notes into their accounts, including Jan Dhan account holders, and determine whether the deposits made are disproportionate to the income of the account holders. So obviously their choices in the lakhs of accounts they examine and those they prosecute will be very arbitrary, selective, politically motivated and also driven by personal vendetta if they are not satisfied with the ‘response’ of these depositors. The opinion formed by the individual assessing officer is critical; he decides whether the explanation or documents offered by the assessee is acceptable or not. The experience of those summoned by the IT department for the first time in their lives, where they find they are unable to prove they are speaking the truth as they have no papers to validate their claims and the resultant harassment they face, will discourage them to pay taxes ever again and move into the white economy, for fear of further harassment. This is the very same reason many people have preferred to launder demonetized notes at great cost from money traders (60:40 ratio) rather than declaring them for a lesser penalty (50 per cent) to the taxman, or to deposit the same in banks, simply to avoid being harassed for the rest of their lives by the avaricious taxman. Not all of them are savvy enough to hire chartered accountants, many of whom have an unholy nexus with the taxmen, to negotiate or reduce the penalties imposed on them for a fee.
And after the Income Tax Department and the Enforcement Directorate, the government is now using the Central Bureau of Investigation (CBI) to track accounts that have seen large deposits. We all know the past history of this corrupt bureau which has made itself a willing tool in the hands of successive governments to carry out motivated investigations against political opponents and the like and which has been referred to by the court as a caged parrot. After the revenue secretary, the new warrior at the forefront of the PM’s big battle against black money is Gujarat-cadre IPS officer Arun Sharma, who has formed a special taskforce in this regard. Sharma’s team will also take up complaints received from the Central Board of Direct Taxes (CBDT). The agency has so far registered nine FIRs as part of its investigation. Sharma, a joint director level officer, is currently the head of CBI’s Banking Securities & Finance Cell. Therefore, I was not very surprised when former Chief Minister of Uttar Pradesh Mayavati was one of the first targets of this team, with deposits in her bank accounts in a Delhi bank and that of her party and her brother being put under the scanner. I am sure many more such heavyweights will be brought under scrutiny after instructions are sent from the PMO. Whether the CBI will examine money deposits by the BJP honchos is another matter.
Many cadres from many political parties will have received demonetized notes from party officials to reroute to them after demonetization is over. So not only should accounts of party officials be examined from many months before demonetization, CBI should also investigate independently, if it dares, the money deposits made after demonetization, which political parties can claim are new donations being made by party supporters after elections in UP and other states are announced. Of course, if cash withdrawal limits from bank accounts are relaxed by January or February, many cadres will simply hand over the cash they have been entrusted with in donations below Rs 20000. CBI should also investigate the accounts of companies like Sahara, which allegedly launders money for many political parties. But we all know nothing of this sort will happen as this tamasha will die a quiet death once elections in all the states are over and may rear its ugly head again only sometime before Lok Sabha elections are due in 2019.
A few BJP party people may also be raided to give the impression of fairness. Though the raids are widely reported, not much is known about what happens thereafter. For example, former chairman of Madhya Pradesh Rajya Sahakari Awas Sangh (and former chairman of Mahanagar Cooperative bank), Sushil Vaswani, a former BJP Minister, was raided by tax authorities, but no money was recovered from him, as the gentleman himself has come out and claimed. Was he tipped off or was a deal done? Rs 90 lakh was seized from a car belonging to Maharashtra Minister Subhash Deshmukh but what we have not read is the fact that the gentleman has been able to explain the source of his cash to the authorities, and has gotten it all back. Rs 10 crore was also seized from a car which was found to belong to a cooperative bank under the directorship of BJP MP, Pritam Munde, the daughter of the late BJP leader Gopinath Munde. When the people in the car claimed that it was money being transported from one bank branch to another, they were able to recover it. But when ordinary people have money seized from cars and claim they were going to the bank to deposit this money, even if it is a few lakhs, they are not granted the same privilege by IT authorities or the cops.
The main job of the CBI will actually be to approach large bank depositors and coerce them to come under the new Income Disposal Scheme, the Pradhan Mantri Garib Kalyan Yojana 2016, instead of battling to prove their case in court over several years and giving the government a big headache. The government is desperate to triumphantly prove to the public that a huge sum, running into the thousands of crores of black cash has been recovered through the raids and examination of bank deposits, fifty percent to eighty five per cent of which will come into the government coffers as tax. Next on the radar of the Prime Minister is benami properties. We hope in his hunt to weed out such illegal land holdings, which will be very hard to prove, no further injustices and harassment will be caused to the people. Playing with people’s hard-earned money is a very dangerous game, whether they are tax evaders or not, and our Prime Minister may find he has put his foot into a viper’s nest. He says his life is under threat for his demonetization drive. The curse of millions of people who feel they are being deprived of the rewards of their blood, sweat and tears may not rob him of his life, but they will certainly rob him of his peace of mind and their goodwill which he had worked so hard to earn.