Watch: How Sahara Was Let Off the Hook in Bribery Scandal

Prominent lawyer Prashant Bhushan discusses the Sahara-Birla diaries case, the fallout of the Income Tax Settlement Commission’s decision to absolve Sahara and what measures he will take in the Supreme Court as the counsel of Common Cause – the petitioner in the case.

Welcome to The Wire. Today we are interviewing eminent advocate Prashant Bhushan who has been fighting cases against different forms of corruption in the Supreme Court as well as on the ground.

Today, we are here to talk about the Sahara-Birla diaries and the case that is pending in the Supreme Court and which the Supreme Court would take up quite soon. The context of today’s interview is the Income Tax Settlement Commission’s decision to absolve Sahara from all criminal and civil liabilities in the alleged payoff scam. The scam in which many prominent politicians and public figures have been named. The Wire had earlier done a story on this and today, here, we are talking to Mr. Prashant Bhushan about the details of the case, about the fallout of the Income Tax Settlement Commission’s decision to absolve Sahara and what measures he will take in the Supreme Court as the counsel of Common Cause, which is the petitioner in the Sahara-Birla diaries case.

Welcome, sir, to The Wire’s interview. Today, as you know, the Indian Express did a story on the Income Tax Settlement Commission absolving all civil and criminal liabilities against Sahara while ordering that the 137 odd crores that were seized during the raid will now be taxed and that too in 12 installments. What is your initial take on the decision?

Well, firstly, Settlement Commission has no authority to absolve anybody from all criminal liability. The only authority that it has is to settle the income tax dues of that assessee and absolve them from penal liability under the Income Tax Act. There is an express bar that the Settlement Commission cannot absolve anybody from any liability under the Indian Penal Code or Prevention of Corruption Act.

But in this case, you see, the Settlement Commission absolving Sahara from penal provisions under the Income Tax Act was also wrong because even that can be done only if Sahara had come absolutely with clean hands and had made a complete full and true disclosure of the facts to the Settlement Commission. In this case, at least apart from the fact that Sahara was found to have concealed at least more than 12,000 crores of income, that concealment came out only during the raids and the documents seized during the raids.

They concealed the facts regarding these documents showing payoffs to various politicians. Now they had no credible or possible explanation for these documents other than what these documents were showing. In fact, the income tax department before the Settlement Commission has recorded the following things – the income tax department itself pointed out that Sahara’s explanation for these documents.

They said that these documents are meaningless, they have been cooked up by an employee called Sachin Pawar in order to implicate another senior employee who was a secretary of Mr. Subrato Roy, that is one Dogra, and that this explanation is totally bogus and cannot be believed. This is what the income tax department told the Settlement Commission, they said, ‘on the basis of these seized documents only the assessee firm has voluntarily surrendered income of 12,017 crores’.

When Shri Sachin Pawar – he is the person from whose computer these documents are supposed to have been recovered – was examined in respect of the entries recorded by him, certain contradictions were found in his version as discussed in detail in Rule 9 report.

In one statement he states that the whole exercise was done to implicate Shri Dogra and get him punished from the management. On the other hand, in a later statement he says that he intended to pass on the statement to various government agencies like IT, SIT etc. When this was pointed out in 245 D4 hearing, that is before the Settlement Commission, it was stated by the AR that the second statement was in continuation and in addition to the first one.

It is obvious to us, that is to the income tax department, that there is a direct contradiction here. If information was to be given to income tax department or the SIT, it would not hurt Dogra but the entire management and the group itself. Because all of them would be implicated in this bribery payoff scam.

Also, it is correctly pointed out by the Principal Chief Commissioner of Income Tax that SIT did not exist at that point of time. See, the perusal of transactions recorded in the seized documents show that they have been recorded in a detailed manner with specific amounts and names of persons/premises, something that appears to be true.

Also, it is observed that the so-called meaningless transactions have been recorded on a regular basis over a period of four-five years. Contention that it is only for the sake of implicating Shri Dogra seems to be unbelievable. Further, on a comparison of the entries of cash receipts, as recorded in the seized documents with the entries in the ledger account of cash impressed given to Shri Sachin Pawar from MARCOM, it is observed that all the entries of cash impressed above one crore appearing in the books of Sahara India, that is MARCOM in the ledger account of Shri Sachin Pawar, have been recorded by Sachin Pawar in the seized documents on the same dates suggesting strongly, thereby, that entries made were not fictitious and not meaningless.

So income tax department gave very cogent reasons to show why these entries were correct, which Sahara was saying was false and meaningless, and for rejecting Sahara’s explanation. Without discussing all this, the Income Tax Settlement Commission has accepted the explanation of Sahara, said that these documents cannot be relied upon, said that all that Sahara has told the Settlement Commission is, therefore true they have made a true disclosure before the Settlement Commission and therefore the matter needs to be settled and therefore they need to be absolved of all penal provisions in the Income Tax Act.

This to my mind was totally irregular. I had written to the Settlement Commission on November 7, three days before this order, saying that they must not settle this matter because I have filed a complaint. These documents will be needed in a criminal investigation. I’m bringing this matter to the Supreme Court and therefore they should not settle. But within three days of my letter reaching them, they passed this order, settling this in this irregular manner.

Of course, the Settlement Commission is really an instrument of the central government. And, in this case, because the central government didn’t want any investigation in this matter and wanted these documents to be handed back to Sahara, which can be a consequence or would be a consequence of the Settlement Commission’s order. Therefore, this order has come to be passed.

So you’re saying that income tax department gave cogent reasons. Actually, it gave three reasons that Sachin Pawar’s statements were contradictory in nature. The second one is that the excel sheets, which mentions all the cash received and cash outflow, is actually tallying with each other and is also tallying with its marketing communications department’s log books. And the third, they’re saying that on the basis of this evidence, only the Sahara group voluntarily disclosed more than 12,00 crores.

On the other hand, the Sahara group did not provide any evidence to the Income Tax Settlement Commission, which brings us to the point: was Income Tax Settlement Commission, which the Indian Express also reported that it was a hurried kind of a hearing – usually, they get around 18 months to settle a dispute, but this was done in less than ten months and specifically three days after you having written a complaint to the Settlements Commission. So did Income Tax Settlement Commission kind of override its own powers or it was not within its powers to give such a decision to absolve all the penalties?

No, it was within its power but it’s a totally incorrect decision because Section 132 4A of the Income Tax Act itself says, ‘where any books of account or other documents are found in the possession of control of any person in the course of a search, it may be presumed, one, that the contents of such books of accounts and other documents are true that the books of accounts and other documents belong to such persons with whom they have been found.’

Now, therefore, when they are presumed to be true and represent the true state of affairs, the onus is on the assessee to displace that assumption. And, in this case, the explanation that they gave was debunked by the income tax department by giving three very cogent reasons to the Settlement Commission. Therefore, Settlement Commission could not have just accepted this cock and bull story being trotted out by Sahara and absolved them of all penal provisions under the Income Tax Act. Of course, they have no power to absolve them of criminal proceedings under the Prevention of Corruption Act or under the Indian Penal Code for bribery because these documents show prima facie bribery of many public servants.

You have read the whole order of the Income Tax Settlement Commission, what is their explanation in absolving Sahara or in accepting Sahara’s explanation?

Nothing; they just say that the income tax department has failed to prove the correctness of these documents. It is not for the income tax department to prove. Under the Income Tax Act, they’re presumed to be true and the income tax department successfully debunked the explanation being given by Sahara, which was a cock and bull story being trotted out by them that Sachin Pawar recorded these entries in order to implicate Dogra.

These entries would have implicated the entire group and these entries were matching with the entries made in the books of MARCOM itself, their marketing communications wing. So the cash received, which is shown in this spreadsheet, on one side there is cash receipt, different dates from MARCOM etc. On the other side, this cash paid, where the dates on which the amount is paid, the amount which is paid, the person to whom it is paid, the place where it is paid and the person who has gone and delivered the cash, it’s all detailed.

Now these two things tally with each other and the cash received here tallies with the books of accounts of their marketing communications division – MARCOM’s ledger must be showing cash removed and here it is cash received.

Once the Income Tax Settlement Commission gives such an order, what are the mechanisms with the IT department where it can appeal now? Does the matter stand resolved?

No, I think the IT department can challenge this order in a writ petition but the problem is that the IT department is also an instrument in the hands of the government. It should have been the IT department’s duty to have duly asked the CBI that look, prima facie, a criminal offence of bribery and corruption seems to have been committed and therefore please investigate the matter under the Prevention of Corruption Act. Register an FIR and investigate, but they didn’t do it. So, therefore it is most likely that the income tax department is not going to appeal against this order.

Does this decision also kind of empower Sahara to get back the seized documents?

Yes, normally once a Settlement Commission’s order becomes final and no appeal is filed against that by the income tax department, the recovered documents are returned back to the party. That is what I had written to the Settlement Commission, that these documents would be required for a criminal investigation and therefore under no circumstances should these documents be handed back to Sahara.

But they have not said anything about it in their order, which means, if the income tax department fails to appeal, the documents could be handed back to them. It’s another matter that copies of these documents must be available, at least photocopies of these recovered documents would be available with the income tax department’s records.

As I also take it, Birla, who has also been implicated in a similar scam, they have also appealed to the Income Tax Settlement Commission. But that decision has not come?

In the Birla case, that decision, as far as I know, has not come. In the Birla case, we have received four volumes of the appraisal report of the income tax department, which contains a large number of highly incriminating documents including emails which show not merely payments to the chief minister of Gujarat but payments to DRI officials for scuttling an investigation against Birla, payments to officials of the Ministry of Environment for various environmental clearances, payments to the coal ministry, payments to other officials which are all mentioned in those emails.

So the Sahara-Birla diaries, as we get it, has created a political storm in the country with the opposition leading an attack against the prime minister himself who has been accused as one of the beneficiaries of both Sahara-Birla when he was the chief minister of Gujarat. You have also alleged that this is at the behest of the central government not wanting to have criminal proceedings against the two companies that such an order by ITSC has come.

You have already filed today an additional affidavit against union of India and demanded that CBI must take up these issues or other investigative [agencies] must take up these issues and start criminal proceedings. You have also kind of laid out all these factors after the Supreme Court told you to get more evidence for the matter. So now what do you think will be the fallout?

Now the Supreme Court will have to examine but I find it very curious that just today in the newspapers it is reported that the CBI is going to register cases against the politicians in the Augusta case on the basis of some cryptic notes contained in the diary of Christian Michel.

Now those cryptic notes mention some AP, FP, FAM. Same thing happened in the Jain Hawala case that there were just initials and some amounts mentioned. That was found sufficient by the Supreme Court to order a court-monitored investigation. In the Sahara case, the detail which is mentioned is so great; it mentions the dates, the amounts, the person to whom it is paid, the place where it is paid and the person who has gone and given the cash. And, this tallies with the cash that they have received, which tallies with the cash which was withdrawn from MARCOM for the purpose of being received to make these payments to these politicians.

The law on this has been settled by the Supreme Court in a recent case of Lalita Kumari, a constitution bench judgment said that once information comes to the police station or to the relevant authority about facts which constitute an offence then an FIR has to be registered and an investigation has to be made. You cannot say at that state of registering an FIR and starting an investigation that ‘look, this information may not be correct’. The investigating agency has to, is obligated to register an FIR and investigate the matter. Prior to investigating an FIR and investigating the matter, they cannot say that this information may not be correct. It will be presumed right now that this information will be correct. Now it’s a matter of investigation, which will reveal the true state of affairs.

Today the government and the CBI is shying away from even registering an FIR and starting an investigation though they are very happy to start an investigation on the basis of Christian Michel’s diary, which contains far less information against Congress politicians. So why is this happening? It seems that it is only happening because the largest beneficiary shown in both the Birla and Sahara diaries is the then Gujarat CM Narendra Modi. Because in the Birla case, 25 crores are shown to have been paid to him or supposed to have been paid to him out of which 12 had been paid at that time and the rest was still remaining. And, in the case of Sahara, more than 40 crores are shown to have been paid to him in nine different installments.

So this is a clear case of corporate-politician nexus and this government seems to be perpetuating it. Any final take on how things should move ahead? What should be the political response and what should be the government’s response in the matter?

This prime minister says that he did this demonetisation, which caused enormous hardship to the people of this country, in order to net black money. Now here is a case where large amounts of black money, in fact bribe money, are shown to have been paid to various politicians of various parties by both Sahara and Birla.

Now, why is he shying away from this investigation? Why is the CBI and the government shying away from this investigation? Why do they want to stall and scuttle this investigation which would net a good amount of black money and bribe money? If he is really serious, if he wants to walk the talk about black money and corruption, this is the first investigation which he should have ordered particularly when there is this big shadow over his head.

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