The income-tax department has almost completed its probe into 2G spectrum scam-related transactions but is waiting for the results of the CBI and Enforcement Directorate investigations to take further action against some companies and individuals on tax evasion.
However, the revelations in the interception of corporate lobbyist Niira Radia’s mobile phone by I-T sleuths in the process of investigating some business honchos on possible tax frauds had come as a “shock” to the tax authorities too as it opened new vistas for them, which go beyond the 2G case and have far wider ramifications, highly-placed sources told this newspaper.
“The I-T department has done its work, it is now watching and waiting for the probe by the CBI and ED, particularly into the money-laundering aspect,” the sources said.
Explaining how the three agencies work in tandem in cases of “white collar crimes” such as these, they said the CBI had to go into all issues and establish the involvement of people and conspiracies hatched by them violating the provisions of various laws, different sections of the Indian Penal Code and the Prevention of Corruption Act, while the ED looked into “illegal transactions” — both inflows and outflows from the country — under the Foreign Exchange Management Act and Prevention of Money Laundering Act.
“Only then does the I-T department step in to assess actual violations with regard to provisions of the Income-Tax Act, including disproportionate income generated in a particular financial year,” the sources said.
As every company is required to maintain books of account on all transactions, the funds generated by them in a particular financial year must have been shown in their records irrespective of the source from where they came. “It is here that the CBI and ED investigations become crucial to establish the actual source of funds — to show if they were generated by legal means, or were ‘ill-gotten’ money sought to be converted into legal money,” the sources said.
“The interception of Radia’s phone has proved to be a big shocker even for the I-T department and it has widened the horizon of the investigation so much that it has gone far beyond the 2G case,” the sources said, adding: “The kind of revelations from her interactions with various persons has turned the matter entirely (towards a) different direction.”
They added: “We never expected it, we only wanted to investigate certain aspects about possible tax evasion, including the money invested in the telecom sector, which is expanding fast and has attracted huge investments.”
What has been published so far in the media about the Radia tapes was an “insignificant portion” in the eyes of the I-T department, which has completed its analysis of the tapes before handing them over to the CBI and ED while seeking their help to go deep into the “money-laundering” aspect.
Since the stakes were high for the I-T department in the 2G case, as it would certainly get much of the credit for “unearthing the bigger malaise” of the country’s economy since liberalisation, the I-T department has been keenly watching Supreme Court proceedings through their senior counsel for weeks.
If the Supreme Court widens the ambit of the investigation to include allocation of spectrum licences from 2001, and also orders a probe into the huge loans given by some public sector banks on the “hypothecation” of 2G licences, as indicated to the CBI by the court, the horizon of the investigation would automatically widen for the I-T authorities as well, the sources said.