3 years of investigation by the CBI. A Chartered Accountant's firm accused of fixing tax tribunal judgments; a Kolkata Tax Tribunal Member facing allegations of corruption. And dozens of tax decisions now tainted by this scam! In an age when corruption makes headlines every day, this story has not got the importance it deserves. And now, we hear, that the Calcutta High Court has stayed the investigation. But we decided to dig deeper and ask if the judiciary will punish one of its own, if corrupt professionals will be taken to task and tainted judgments rectified. Amrita Panja in Kolkata and Payaswini Upadhyay in Mumbai piece the puzzle together.
Year: 2008
Day: 13th May
Place: Kolkata
Based on a case filed with it the CBI laid a trap. Jugal Kishore - A member of the Kolkata Income tax Appellate Tribunal was caught accepting Rs 30 lakh in an alleged bribe.
(The CBI press release does not mention Jugal Kishore's name)
Outside his residence, the CBI apprehended two employees of S K Tulsiyan - a Kolkata based law and accounting firm. All 3 were arrested.
(The CBI press release does not mention S K Tulsiyan's name)
Soon thereafter, 3 others belonging to the same firm were also behind bars. And after 3 years of investigation, in January this year, the CBI filed a chargesheet under the Indian Penal Code and Prevention of Corruption Act.
The CBI chargesheet accuses the tribunal member of accepting bribes to show undue favors in tax matters represented by the accounting firm. The chargesheet also accuses the employees of the firm of preparing orders on behalf of the Kolkata ITAT member.
Two days after his arrest in 2008, Jugal Kishore was suspended by a Presidential order and told that he could not leave Kolkata without prior permission. Kishore was an Accountant Member of the Kolkata Tribunal. An Accountant member, just like a judicial member, is appointed by a Selection Board dominated by representatives of the Law Ministry. Several judgments, written by Kishore, may now be potentially tainted by the allegations of corruption.
A current tribunal member told this show that "this matter should be internally examined within the Law Ministry, preferably by a Committee of Enquiry headed by a respected Member of the Public or a Judge and only after the enquiry should a decision be taken on whether the matter has to be handed over to the Central Bureau of Investigation."
But a former Supreme Court judge said
"Being corrupt is not something done in the line of a judge's line of duty and there is no reason to protect him and insist on sanction."
The offices of S K Tulsiyan are located in Park Centre, Kolkata, with an office in Mumbai as well. Tulsiyan is reportedly an advocate and runs a firm offering both legal and accounting services. Two of his family members and two associates or middlemen were among those arrested.
Tulsiyan's involvement came as no surprise to some within the fraternity. Former ITAT Mumbai President and renowned tax counsel Soli Dastur wrote in a letter to The Federation of Tax Practitioners Journal that
"One does not at all know whether there is any truth in the particular allegation of bribery and for the moment one must assume the parties to be innocent until proved guilty. What is unfortunate is that members practicing in the Tribunal, at least in Mumbai, did not evince any great sense of disbelief or surprise that there could be an occurrence of this nature. In the Bar Association members recounted stories of the influence which the Advocate concerned commands and the easy access and audience he always has. It is also rumored that he and his sons have been generous in providing hospitality to members of the Tribunal."
Now, of course, they are out of jail. And last week, when I visited Tulsiyan's office I was told he had obtained a stay against the investigation. But I was not able to gather more on how and why. Nor was the CBI willing to share any information on progress made in the case.
In June 2008, the ITAT Bar Association, in Mumbai, held a meeting that noted the matter and urged a speedy, independent investigation by the CBI. Nothing more.
Soli Dastur had in his letter urged the adoption of a code of conduct, saying
"The issue of the members evolving a code of conduct for themselves has been pending now for over 7 years. The Federation has already submitted a draft for consideration of the learned members but not action has been taken."
That was 2008. It's 2012 and as per our information a Code of Conduct is not yet in place. Considering that Tulsiyan is an advocate, it would fall upon the Bar Council to investigate his actions as well. But it hasn't. We also asked the Institute Of Chartered Accountants if it had considered taking action against Tulsiyan and his firm in the last 3 years.
Jaydeep N Shah
President, ICAI
"Yes, we have issued a letter to Mr Tulsiyan and we are seeking the information the CBI as well as the Tribunal. If we know further number of CA's associated, then definitely we will proceed against those Chartered Accountants."
After the arrest of Tulsiyan and his employees, including his relatives in 2008, unconfirmed news reports say the CBI found hard disks containing over 75 documents that bore similarities to judgments not just by the Kolkata tribunal, but tribunals in Bhubaneshwar, Hyderabad, Chennai, Mumbai and other centres. Some judgments had yet to be delivered.
(CBI has not confirmed the seizure of data from S K Tulsiyan's office)
And so this story that started in Kolkata in 2008 has now become a nationwide scandal impacting tax tribunal judgments from across the country.
PTI reported that the CBI has for 3 years been awaiting sanction from the law ministry to prosecute some 16 tax tribunal members for corrupt activities such as fixing orders in exchange for bribes. S H Kapadia, the Chief Justice of India has also urged the government to take appropriate action. Ironically, in the last 3 years, one of the suspected corrupt tribunal members has been appointed a High Court judge.
Some day that will throw the ball back in the Chief Justice's court and some day all of this will cast a very long shadow over tens of judgments written by these members and judges. And that brings us to the third question in this story - can tainted judgments be rectified?
Additional Solicitor General A.S. Chandhiok says Revenue, that lost many of these allegedly fixed cases, can reopen them even before the criminal proceedings against Jugal Kishore conclude.
AS Chandhiok
Additional Solicitor General
"There are two options available- one is if the department has sufficient evidence available with them to show and link them with considerations other than law, then obviously such orders will be nullity and they will be entitled to make their demand based on the original assessments which must have been turned down by these so called vitiated orders. But if they find that evidence is not sufficient- a) they may have to explain why did they not go to the Appellate Court or to the High Court. If they have not gone, they can still do that saying these circumstances have now come to our notice and in view of these, approach the either the apex court directly or to my mind, High Court will be a better option and file an appeal or file a writ petition that in the light of these extraordinary circumstances, all these orders must be said to be vitiated and the Tribunal must reconsider the matter again and pass the same is accordance with law."
But there's one more twist- several off-the-record conversations with senior tax counsels reveal that some of the orders passed by Jugal Kishore have been reaffirmed by the Calcutta High Court.
HP Ranina
Senior Advocate, Supreme Court
"The High Court will only look into the issue of questions of law. As you know under Section 260A, you can only go to the High Court on a substantial question of law. So High Court will decide on the interpretation of a Section and that interpretation would stand, irrespective of any other issue. The only issue is if the quantum of the tax payment- if that has been, in any way, affected by the purported or alleged order of the ITAT, then the Assessing Officer can go back into the facts and apply the judgment of the High Court and he will not be bound by the ITAT order."
By now I'm sure you are wondering whether there has been any precedent on what happens to vitiated judgments. Well, no there hasn't. Because though allegations have been made regarding corruption in the higher judiciary none of these have come to any fruition. So I'm going to end with a comment from a former Mumbai ITAT president on how these events have impacted the tribunal.
"The mood in the Tribunal is quite disturbed. Members are uncertain as regards the way events will unfold in relation to sixteen ITAT Members. Some more in addition to those sixteen do know for themselves that they can be affected and are therefore equally worried. The result is that there is a tendency to adjourn matters involving large amounts. The more unfortunate trend which is seen is that from now on, it may be difficult for tax payers to get big relief in ITAT."
Since the case is still under investigation, I just want to clarify that the CBI press release takes no names. We have identified Mr Jugal Kishore as the Kolkata Tribunal Member facing charges based on his suspension. Our efforts to reach him for a comment were not successful, despite a visit to his house.
As for S K Tulsiyan, he, his firm and employees have also not been named by the CBI. When we asked Mr. Tulsiyan regarding his alleged involvement in the case he responded via email saying 'the case framed against us by the CBI is totally a fabricated one wherein we are totally unconnected with the issue. None of us are in any way involved in the alleged issue of bribing any Kolkata ITAT Member. All actions taken against us are totally presumptive in nature and bear no credence in face of the true facts of our case. no data or hard disk containing the alleged ITAT judgments has ever been discovered and/or seized from any of our business or personal premises.'
Mr Tulsiyan also asked this show to 'refrain from developing and bringing before the public via your channel, any story based on the allegations of the CBI.'
But, that request, Mr Tulsiyan, we unfortunately could not comply with. Nonetheless, let me reiterate - all involved are innocent until proven guilty - except that can only happen when the case progresses, which as of now it is not.
Year: 2008
Day: 13th May
Place: Kolkata
Based on a case filed with it the CBI laid a trap. Jugal Kishore - A member of the Kolkata Income tax Appellate Tribunal was caught accepting Rs 30 lakh in an alleged bribe.
(The CBI press release does not mention Jugal Kishore's name)
Outside his residence, the CBI apprehended two employees of S K Tulsiyan - a Kolkata based law and accounting firm. All 3 were arrested.
(The CBI press release does not mention S K Tulsiyan's name)
Soon thereafter, 3 others belonging to the same firm were also behind bars. And after 3 years of investigation, in January this year, the CBI filed a chargesheet under the Indian Penal Code and Prevention of Corruption Act.
The CBI chargesheet accuses the tribunal member of accepting bribes to show undue favors in tax matters represented by the accounting firm. The chargesheet also accuses the employees of the firm of preparing orders on behalf of the Kolkata ITAT member.
Two days after his arrest in 2008, Jugal Kishore was suspended by a Presidential order and told that he could not leave Kolkata without prior permission. Kishore was an Accountant Member of the Kolkata Tribunal. An Accountant member, just like a judicial member, is appointed by a Selection Board dominated by representatives of the Law Ministry. Several judgments, written by Kishore, may now be potentially tainted by the allegations of corruption.
A current tribunal member told this show that "this matter should be internally examined within the Law Ministry, preferably by a Committee of Enquiry headed by a respected Member of the Public or a Judge and only after the enquiry should a decision be taken on whether the matter has to be handed over to the Central Bureau of Investigation."
But a former Supreme Court judge said
"Being corrupt is not something done in the line of a judge's line of duty and there is no reason to protect him and insist on sanction."
The offices of S K Tulsiyan are located in Park Centre, Kolkata, with an office in Mumbai as well. Tulsiyan is reportedly an advocate and runs a firm offering both legal and accounting services. Two of his family members and two associates or middlemen were among those arrested.
Tulsiyan's involvement came as no surprise to some within the fraternity. Former ITAT Mumbai President and renowned tax counsel Soli Dastur wrote in a letter to The Federation of Tax Practitioners Journal that
"One does not at all know whether there is any truth in the particular allegation of bribery and for the moment one must assume the parties to be innocent until proved guilty. What is unfortunate is that members practicing in the Tribunal, at least in Mumbai, did not evince any great sense of disbelief or surprise that there could be an occurrence of this nature. In the Bar Association members recounted stories of the influence which the Advocate concerned commands and the easy access and audience he always has. It is also rumored that he and his sons have been generous in providing hospitality to members of the Tribunal."
Now, of course, they are out of jail. And last week, when I visited Tulsiyan's office I was told he had obtained a stay against the investigation. But I was not able to gather more on how and why. Nor was the CBI willing to share any information on progress made in the case.
In June 2008, the ITAT Bar Association, in Mumbai, held a meeting that noted the matter and urged a speedy, independent investigation by the CBI. Nothing more.
Soli Dastur had in his letter urged the adoption of a code of conduct, saying
"The issue of the members evolving a code of conduct for themselves has been pending now for over 7 years. The Federation has already submitted a draft for consideration of the learned members but not action has been taken."
That was 2008. It's 2012 and as per our information a Code of Conduct is not yet in place. Considering that Tulsiyan is an advocate, it would fall upon the Bar Council to investigate his actions as well. But it hasn't. We also asked the Institute Of Chartered Accountants if it had considered taking action against Tulsiyan and his firm in the last 3 years.
Jaydeep N Shah
President, ICAI
"Yes, we have issued a letter to Mr Tulsiyan and we are seeking the information the CBI as well as the Tribunal. If we know further number of CA's associated, then definitely we will proceed against those Chartered Accountants."
After the arrest of Tulsiyan and his employees, including his relatives in 2008, unconfirmed news reports say the CBI found hard disks containing over 75 documents that bore similarities to judgments not just by the Kolkata tribunal, but tribunals in Bhubaneshwar, Hyderabad, Chennai, Mumbai and other centres. Some judgments had yet to be delivered.
(CBI has not confirmed the seizure of data from S K Tulsiyan's office)
And so this story that started in Kolkata in 2008 has now become a nationwide scandal impacting tax tribunal judgments from across the country.
PTI reported that the CBI has for 3 years been awaiting sanction from the law ministry to prosecute some 16 tax tribunal members for corrupt activities such as fixing orders in exchange for bribes. S H Kapadia, the Chief Justice of India has also urged the government to take appropriate action. Ironically, in the last 3 years, one of the suspected corrupt tribunal members has been appointed a High Court judge.
Some day that will throw the ball back in the Chief Justice's court and some day all of this will cast a very long shadow over tens of judgments written by these members and judges. And that brings us to the third question in this story - can tainted judgments be rectified?
Additional Solicitor General A.S. Chandhiok says Revenue, that lost many of these allegedly fixed cases, can reopen them even before the criminal proceedings against Jugal Kishore conclude.
AS Chandhiok
Additional Solicitor General
"There are two options available- one is if the department has sufficient evidence available with them to show and link them with considerations other than law, then obviously such orders will be nullity and they will be entitled to make their demand based on the original assessments which must have been turned down by these so called vitiated orders. But if they find that evidence is not sufficient- a) they may have to explain why did they not go to the Appellate Court or to the High Court. If they have not gone, they can still do that saying these circumstances have now come to our notice and in view of these, approach the either the apex court directly or to my mind, High Court will be a better option and file an appeal or file a writ petition that in the light of these extraordinary circumstances, all these orders must be said to be vitiated and the Tribunal must reconsider the matter again and pass the same is accordance with law."
But there's one more twist- several off-the-record conversations with senior tax counsels reveal that some of the orders passed by Jugal Kishore have been reaffirmed by the Calcutta High Court.
HP Ranina
Senior Advocate, Supreme Court
"The High Court will only look into the issue of questions of law. As you know under Section 260A, you can only go to the High Court on a substantial question of law. So High Court will decide on the interpretation of a Section and that interpretation would stand, irrespective of any other issue. The only issue is if the quantum of the tax payment- if that has been, in any way, affected by the purported or alleged order of the ITAT, then the Assessing Officer can go back into the facts and apply the judgment of the High Court and he will not be bound by the ITAT order."
By now I'm sure you are wondering whether there has been any precedent on what happens to vitiated judgments. Well, no there hasn't. Because though allegations have been made regarding corruption in the higher judiciary none of these have come to any fruition. So I'm going to end with a comment from a former Mumbai ITAT president on how these events have impacted the tribunal.
"The mood in the Tribunal is quite disturbed. Members are uncertain as regards the way events will unfold in relation to sixteen ITAT Members. Some more in addition to those sixteen do know for themselves that they can be affected and are therefore equally worried. The result is that there is a tendency to adjourn matters involving large amounts. The more unfortunate trend which is seen is that from now on, it may be difficult for tax payers to get big relief in ITAT."
Since the case is still under investigation, I just want to clarify that the CBI press release takes no names. We have identified Mr Jugal Kishore as the Kolkata Tribunal Member facing charges based on his suspension. Our efforts to reach him for a comment were not successful, despite a visit to his house.
As for S K Tulsiyan, he, his firm and employees have also not been named by the CBI. When we asked Mr. Tulsiyan regarding his alleged involvement in the case he responded via email saying 'the case framed against us by the CBI is totally a fabricated one wherein we are totally unconnected with the issue. None of us are in any way involved in the alleged issue of bribing any Kolkata ITAT Member. All actions taken against us are totally presumptive in nature and bear no credence in face of the true facts of our case. no data or hard disk containing the alleged ITAT judgments has ever been discovered and/or seized from any of our business or personal premises.'
Mr Tulsiyan also asked this show to 'refrain from developing and bringing before the public via your channel, any story based on the allegations of the CBI.'
But, that request, Mr Tulsiyan, we unfortunately could not comply with. Nonetheless, let me reiterate - all involved are innocent until proven guilty - except that can only happen when the case progresses, which as of now it is not.
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