Govt sets up Criminal investigation directorate to deal with black money

Govt sets up Criminal investigation directorate to deal with black money

In a pro-active step towards unearthing black money, the Government on Monday announced setting up of a criminal investigation wing in the income tax department to track and prosecute economic offenders.

The announcement to constitute the Directorate of Income Tax (Criminal Investigation) under the Central Board for Direct Taxes (CBDT) comes on the heels of government instituting a national study to quantify unaccounted wealth within and outside the country.

A day earlier, the Finance Ministry had formed a committee of senior tax officials to examine ways to strengthen laws to curb the generation of black money in the country, its illegal transfer abroad and its recovery.

All these measures have been unveiled days ahead of Yoga Guru Ramdev threatening to go on hunger strike on the issue of black money and corruption.

The DCI, to be set up with immediate effect, would collect information about persons and transactions connected with criminal activities and initiate prosecution proceedings against them.

"The DCI will perform functions in respect to criminal matters having any financial implication punishable as an offence under any direct tax law," the Finance Ministry said.

The DCI will seek and collect information about persons and transactions suspected to be connected with criminal activities "having cross-border, inter-state or international ramifications, that pose a threat to national security and are punishable under the direct tax laws".

The directorate will also investigate the source and use of funds involved in such criminal activities and file prosecution complaint in competent courts.

The DCI could also hire the services of special prosecutors and other experts for pursuing a prosecution complaint, the Finance Ministry said.

Apart from agreement with different central or state agencies in India, it could also enter into pacts for sharing of information or cooperation with foreign governments.

Tax and auditing firm Deloitte Haskins & Sells said the setting up of a wing to tackle problems of terror network funding, cross border tax evasion and money laundering cases is the need of the hour and would be an extremely welcome move.

"However, for it to have a real impact, it is key that the Directorate be vested with independent powers," M Lakshminarayanan, Leader-Tax, Deloitte Haskins & Sells said.

For effective prosecution, the agency will also execute "appropriate witness protection programmes".

The directorate has been authorised to coordinate with and extend necessary expert and logistical support to any other domestic intelligence agency probing crimes having ramification of threat to national security.

The special wing will be headed by a Director General of Income Tax (Criminal Investigation) in the rank of Chief Commissioner of Income Tax, and will be located in New Delhi.

The wing will have eight Directors of Income Tax (Criminal Investigation) located in Delhi, Chandigarh, Jaipur, Ahmedabad, Mumbai, Chennai, Kolkata and Lucknow.

The government has announced a five-pronged strategy to tackle the menace of illicit funds, including joining global crusade against black money and creating appropriate legislative framework.(ST-30/05)

Anna Hazare, said that he was not hopeful of the government meeting its deadline of 30^th June for preparing the bill.

At the meeting held under the Chairmanship of Finance Minister Pranab Mukherjee, contentious issues came up for discussion in the committee for the first time.

Arvind Kejriwal and Prasahant Bhushan, both civil society members of the committee, said except on one issue of keeping citizen charter and public grievances under the jurisdiction of Lokpal, the government opposed the demands for bringing the Prime Minister, higher judiciary and the corrupt acts of MPs inside Parliament under the ambit of the Lokpal.

They said the government's proposals today were "worse" than what it had proposed in its first bill, which had been "condemned and rejected".

Kejriwal said even the latest bill of the government had kept Prime Minister under the purview of Lokpal but the government has gone back on it.

As no agreement could be reached between them today, the government has decided to write to states and political parties to seek their opinion on these "issues of divergence" and get back to them at the next meeting on 6^th June.

Sibal said there was need to take the view of the states since Lokayukts have to be appointed there.

Bhushan said the government representatives told them that bringing the Prime Minister under Lokpal's purview would make him 'dysfunctional'.

He pointed out that the government's bill itself had a provision for bringing Prime Minister under the Lokpal and even now he was not beyond the purview of investigation on corruption issues.

"We only wanted that he comes under the purview of an independent agency instead of the agencies that come under the government which results in conflict of interest," Bhushan said. Kejriwal also rued "Prime Minister wants to be investigated by an agency like CBI, which is under him but not by an independent agency."

Besides Mukherjee, those who attended the meeting from the government side were Ministers P Chidambaram (Home), Sibal (Law), Salman Khurshid (Minority Affairs) and M Veerappa Moily (Law).

From the civil society side, those present were Hazare, Shanti and Prashant Bhushan, Kejriwal and Santosh Hegde. 

While the civil society members wanted the Lokpal to have powers to investigate corruption cases against the entire bureaucracy irrespective of its hierarchy, the government was of the view that it should confine to officers of Joint Secretary level and above.

On the issue of investigating corruption cases against the MPs, the government said that it has no objection to the Lokpal investigating corruption issues involving them outside Parliament but opposed the proposal to allow Lokpal to investigate the acts of corruption by the MPs inside Parliament.

The government also wanted that the defence personnel should be kept out of the purview of the bill, Kejriwal said.

He added that the government also held the view that the offices of Chief Vigilance Commissioner and CBI should not be merged with Lokpal.

The civil society members, however, rejected the government's contentions and expressed dismay at its response. "There were too many fundamental differences on the bill today," said Kejriwal adding the government wanted "self regulation" to take care of the issue of corruption in higher judiciary and the acts of MPs inside Parliament.

"We told them that self regulation has not worked in the last sixty years." Bhushan said "the response of the government was not very reasonable on all the issues. We were a bit disappointed by the response of the ministers. This whole concept of self-regulation does not work."

Asked whether he is hopeful of an early resolution on these contentious issues, Kejriwal merely said "let us see and wait what happens".

Sibal, however, expressed confidence that the bill for a strong and effective Lokpal will be a reality.

"We must provide the country with a transparent legislation as corruption is an issue which concerns everybody. We remain committed to provide the people an effective Lokpal."

Asked what will be the guiding principle of the government in drafting the bill amid so much differences, Sibal stressed "the guiding principle is that the Constitution is supreme. Any Lokpall bill must be consistent with the provisions of the Constitution."

Kejriwal, however, said if keeping everything like judiciary, PM and MPs violate the Constitution then what will come under the Lokpal's ambit.

He said that a decision has now been taken to seek public opinion on these contentious issues on website and seek their suggestions.

It was decided that the joint drafting committee will meet twice on June 6th and 10th.