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Tuesday, May 17, 2011
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Supreme Court raps IT department for slow progress in 2G probe

J. Venkatesan

“We are sure the department would have slept over it if the court had not intervened”

‘Though companies were put under surveillance from 2008, action taken only after March 2011'
IT department says it's looking into aspect of tax evasion by these companies

New Delhi: The Supreme Court on Monday expressed its displeasure over the slow progress of the investigation by the Income Tax department against the companies involved in the 2G spectrum scam.

A vacation Bench of Justices G.S. Singhvi and A.K. Ganguly, hearing the petition relating to the 2G scam, said if the Supreme Court had not intervened the officials would have slept over it and the probe would not have proceeded.

Justice Ganguly, after perusing the status report submitted by the IT department told Additional Solicitor-General Vivek Tanka that though the companies were put under surveillance from 2008, action was taken only after March this year after the department was directed to file action taken report. The Judge observed: “We are sure the department would have slept over it if the court had not intervened. There is no doubt about it.”

When Mr. Tanka said that the delay was because big companies were involved, Justice Singhvi told the counsel, “how are they big. Don't have such a mind set. Prima facie they are all tax evaders.” Mr. Tanka clarified that what he meant was the companies were big in terms of financial transactions.

The ASG said that those telecom companies which had sold their controlling stakes to foreign firms through the Mauritius route, after the allotment of the spectrum, had been asked to pay tax on the capital gain from such transactions and assessment proceedings were going on.

Justice Singhvi asked the IT department to complete the assessment proceedings expeditiously.

The Bench asked the CBI to take note of the comprehensive status report of the IT department and conduct its probe on those lines and incorporate it in its next status report.

In its status report, the IT department said that it had issued orders for centralised assessment of group companies involved in 2G scam. It said it was looking into the sources of income, payments received, details of purchase of infrastructure and source of funds of Etisalat, Videocon telecom limited, Uninor and Loop telecom from 2008. It said the department was looking into the aspect of tax evasion by these companies.

Prashant Bhushan, counsel appearing for Centre for Public Interest Litigation (CPIL), submitted that companies from the United States, Europe and the Gulf were taking the Mauritius route by opening “post-box companies” and taking tax benefits. However, the bench made it clear that it could not enlarge the scope of this petition.

The Bench posted the matter for further hearing on July 6.

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