I-T FORCES HSBC A/C HOLDERS TO SPILL BEANS
This could well be a
last-ditch attempt by tax authorities to finish the messy job of
bringing to book individuals having undisclosed accounts with HSBC
Geneva. In the past few days, men and women whose names appear in the
now-famous list of account holders with the Swiss private banking arm of
the British bank have been asked by income-tax officials to sign on a
two-page letter spelling out their account details
and, more
significantly, surrendering their rights under the Swiss secrecy law.
The individuals concerned have been told by tax officials to mail the
signed letter to two in-house lawyers of the bank David Garrido, general
counselSwitzerland, HSBC Private Bank (Suisse) SA, and Christine
Knight-Maunder, general counselglobal private bank. The individuals have
also been asked to submit a copy to the Income-Tax Department. Till
now, HSBC has refused to share the information with the Indian
government without the approval of its clients. Among other things, the
bank has resisted on the grounds that the data was stolen by a former
employee of the bank and later handed over to the French government in
return for an asylum in France. Under the circumstances, a letter from
account holders authorising the bank to share account records will pave
the way for the Indian tax office to access transaction details and
raise tax claims on undisclosed income. There is a sense of panic as
many dont know how to handle the situation. Some prefer to ignore it and
pay a penalty. But if the department seeks information under Section
133, ignoring it could mean trouble later, said a senior chartered
account familiar with the development. Some have signed while others are
trying to find ways to buy time as the tax department has to complete
the assessment by mid-2014, two years since the raids were conducted.
There are account holders who may give an incorrect signature that may
not match with the one with HSBC. Also, signatures of beneficiaries of
trusts with accounts in HSBC may not help the department as only
trustees are empowered to give such an authorisation, said a tax lawyer.
According to sources in the tax department, those willing to give their
consent to the bank may be doing it to avoid a hefty demand later. In a
particular case, a lady gave consent as she was unaware of the account
that her husband, who is now dead, had opened years ago. She is willing
to pay tax and settle the matterThere are similar cases, said a tax
officer. The pre-formatted letter calls for disclosure of all relevant
information : account number, master number (which is a single account
encompassing individuals, companies and trusts), beneficiaries and
settlers of trusts, personal details such as address, date of birth and
contact number. Besides, it carries the following declarations: I am/we
are co-operating with the Income-Tax department, Government of India,
I/we hereby instruct and authorise HSBC Private Bank (Suisse) SA to
provide me any and all account records in the banks possession, and
finally, With this instruction, I/we hereby waive all protections
provided under the data protection, privacy and/or bank secrecy laws of
Switzerland. Account records, in banking parlance, include documents
identifying the account holder, beneficial owner and authorised persons,
documents pertaining to foreign entities established or operated on
behalf of the Indian taxpayer, account opening documents, correspondence
between the bank and the customer or any third party in relation to the
account, account statements and statements of assets. The departments
decision to seek account holders consent is probably aimed at saving
time. Invoking the information-sharing agreement between the two
countries, which came into effect on Jan 1, 2012, in Switzerland and on
April 1, 2012, in India, could have been a more time-consuming process.
The I-T department has already launched prosecution proceedings against
persons named in the list of Indian account holders with LGT Bank in
Liechtenstein, a tax haven near Germany. –
www.economictimes.indiatimes.com