Finance Bill 2017 & IT Act Amendment: Jaitley lets Commoner Down, Opposition Worse

Introduction of Amendments in the Finance Bill 2017 with far reaching consequences is an act of undermining the role of the Upper House of the Parliament. Is the interest of the common taxpayer being compromised as the Government aims to hunt the big cats?

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Finance Bill 2017 & IT Act Amendment Jaitley lets Commoner Down, Opposition Worse
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In the Indian Capita, December 19, 2015, was one of the most eventful days for reporters on the political beat. Thousands of Congress supporters had jammed the Rajpath and the road leading to the Patiala House courts where Congress leaders Sonia Gandhi and her son, Rahul, were to appear in the infamous National Herald case against BJP’s biggest gadfly, Dr. Subramanian Swamy.

Two years later, the opposition – reduced to dust in the recent potboiler elections for the assembly of Uttar Pradesh – remained muted in silence in its protest against one of the most intriguing elements of this year’s budget presentation: Union finance minister Arun Jaitley’s pitch for political funding reform.

But the results have been disastrous as India’s political finance regime remains plagued with major infirmities. I can count four instantly. There is a steady torrent of undocumented cash lubricating activities of both parties and candidates, there is zero transparency in political contributions, political parties continue to be out of the ambit of independent audit and the powers of the Election Commission, one of world’s most powerful election bodies, remains outdated.

Worse, there is now a dramatic mismatch between what ails political finance in India and the government’s “reform” measures. And then, the new amendment of Income Tax Act, which allows an IT official to walk into any home to conduct searches. This becomes a matter of concern, the biggest loser being the public.

And it happened because India lacked a genuine opposition.

An unprecedented event took place in the Lok Sabha during the Budget session, when the Finance Minister Arun Jaitley moved a set of 40 Amendments with the Finance Bill. The annual Union Budget is a gala affair with lots of analysis and television shows on what the Union Government wants to do with revenue generation and disbursement of resources and what the balance of payment would be like in the financial cycle. However, while all of this went past by, one thing, which did not make headlines was the tabling of 40 Amendments in the Lok Sabha as part of the Bill.

What’s wrong with this?

In Independent India, this is the first time something of this magnitude is happening and while it is true that while facing the ire of a united Opposition, Finance Minister Jaitley as a skilled lawyer had the sharpness to justify the act by quoting the first Speaker, GV Mavalankar, saying, “A Bill substantially deals with the imposition, abolition etc of a tax, the other provisions necessary for the achievement of the Bill cannot take away from it the category of money bills.” This was a strong statement to validate the action and is surely setting a wrong precedent. In fact, a Finance Bill is a Money Bill and needs passage only from the Lower House. The RajyaSabha can suggest amendments but they need a final clearance from the LokSabha.

Henceforth, any Government of the future can act in a similar manner and it is the letter and not the spirit that is going to count. More so because the Amendments, even though have financial implications but needed to be brought about in a manner that justifies the sweeping changes they propose.

However, is it only Prime Minister Narendra Modi and his team that is to be blamed for this act? The huge outcry that happened when Sonia and Rahul were forced to appear personally for the National Herald case? The Parliament had come to a screeching halt. No business was taken up and public money was wasted for having forced them to come down from their glass palaces. But not a noise this time. If the Parliament had come to a grinding halt this time, there would have been some debates in the streets and town halls of the nation.

Not many are aware of the kind of amendments that have been cleared.

What are these Amendments

Take the case of the Amendment of the Section 132 of the Income Tax Act.

  1. In section 132 of the Income-tax Act,—
    (i) in sub-section (1), after the fourth proviso, the following Explanation shall be inserted and

shall be deemed to have been inserted with effect from the 1st day of April, 1962, namely:—

“Explanation.––For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.”;

(ii) in sub-section (1A), the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 1975, namely:—

“Explanation.––For the removal of doubts, it is hereby declared that the reason to suspect, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.”;

While the original section states that –

  1. 7 Search and seizure 8

(1) 9 Where the 10 Director General or Director] or the 11 Chief Commissioner or Commissioner] 12 or any such] 13 Deputy Director] or 14 Deputy] Commissioner as may be empowered in this behalf by the Board], in consequence of information in his possession, has reason to believe that-

(a)any person to whom a summons under sub- section (1) of section 37 of the Indian Income- tax Act, 1922 (11 of 1922 ) or under subsection (1) of section 131 of this Act, or a notice under sub- section (4) of section 22 of the Indian Income- tax Act, 1922 (11 of 1922 ), or under sub- section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or …

(A)the 3 Director General or Director] or the 4 Chief Commissioner or Commissioner], as the case may be, may authorise any 5 Deputy Director], 6 Deputy] Commissioner, 7 Assistant Director], 8 Assistant Commissioner or Income- tax Officer], or

(B)such 9 Deputy Director] or 10 Deputy] Commissioner, as the case may be, may authorise any 11 Assistant Director], 12 [ Assistant Commissioner or Income- tax Officer], (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to-

(i)enter and search any 1 building, place, vessel, vehicle or aircraft] where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept;…

It’s quite clear from the statement of the Section of the Act, that there was no provision for an officer, authorised by the Director General or the Chief Commissioner level officer of the IT department, to not report the cause, a seizure or raid to any appellate tribunal or any other authority or individual so linked with the ensuring of justice to an individual citizen of the country or a company or private body registered in the country. Moreover, the second amendment of the section also adds that the officer on duty is not bound to even reveal the cause for suspicion.

The Amendment in the Section states that the authorised officer is not answerable to any tribunal or any other authority for the act of seizure or raid to be carried out. The fact that such an Act is going to be effective from April 1, 1962, also means that if a junior taxman can convince the department that my grandfather had in his possession untaxed assets, he can come and raid my home and seize anything that he deems fit, without having to give any explanation in case I chose to appeal to a tribunal or officer.

The fact that on one hand, the Government and its Finance Minister, ArunJaitley states in the Parliament that there will be no retrospective tax, as had been the case with the UPA regime trying to impose the same on the Vodafone; things look as bleak as ever. May be even worse.

What makes an ordinary citizen even helpless that not a single political party, claiming to be representative of the people in the world’s largest democracy is sincere in doing its job of protecting the rights of the citizen.

While some are justifying the amendment saying the big fishes can be brought to books only with such laws in hand, as a policy it is scary and draconian in nature. For the simple reason, will an officer, with whom I could possibly have a tiff last night, use this as a tool to settle personal scores? The answer could be, ‘yes’. And that’s what is dangerous.

The big question is, will we ever realise how our political masters let us down every day.

We may try to answer this on our own, since the intent of the Government and the Opposition is quite doubtful.