18 January 2008

My experiences with the Income Tax Department -- 7
[A single-page version of this blog can be seen here]

Readers who have not abandoned the field after the complex manoeuvres of Mr Sebastian described in the previous blog will admit bafflement.

You would imagine that if in March 2003, the chief commissioner of income tax had stepped up to Mr Sebastian and asked, "What have you been doing these past two months to justify your salary from the exchequer," the latter would have answered, "Look, I have met Philip George and his representatives in January and again in February and here are their autographs to prove it."

But we know that he couldn’t have answered thus.

In January and February Mr Sebastian displays a studied indifference to autographs. Autographs interest him not at all. Were an autograph to accost him on the streeet and tap him on the chest Mr Sebastian would respectfully decline to make acquaintance.

But after the vigilance inquiry is set into motion his non-enthusiasm for autographs undergoes an overnight change. He embraces them with gay abandon. Of autographs he cannot have enough. When he spots an autograph on the horizon he gallops to retrieve it for his collection.

Not only does he make sure to collect autographs at all current meetings, he collects autographs to substantiate meetings that have occurred more than half a year before. He is even beginning to like the sight of his own autograph, sending out written statements calling for information that has been submitted to him much earlier.

On other fronts too his disposition turns cheerful. In February he had declined to give me a copy of the statement signed by me, a document in whose copyright I could claim the greater share, since his was confined to the questions. But in August when we make a written demand for the statement, he complies immediately.

I am a bit slow on the uptake. Friends sometimes refer to me as Philip Tubelight. Typically I start to smile after the laughter following a joke has died down. So I must admit it took me a long time to figure out Mr Sebastian's actions.

Why would he deny me a copy of the statement I had made? Why would he summon my tax consultant etc to substantiate their presence on the day I had made my statement, which was more than six months before? And why would he call for documents that had already been submitted to him much before?

It was only much later that I realised that his reluctance to give me a copy of my statement was really intended for my own good. And that such concern for the tax assessee is widespread within the income tax department. Indeed it would be appropriate to describe the standard pattern of action as a modus operandi, a term I use with extreme reluctance, being usually reserved by the police for such gents as AB Jeb Katra and CD Batua Chor.

This is how it works. On the second or third meeting with the assessee the official scrutinising the returns points out a long series of holes in the accounts and outlines the consquences that could follow. In some cases he even hands out a written statement pointing out the holes. The statement will be on a plain piece of paper and it won't be signed. The idea is to strike the fear of God (or the income-tax department, which is more or less the same thing) into the assessee. The typical assessee caves in at this point, forks out a suitable amount under the table after mutual agreement, and the scrutiny is finalised. The holes are ignored; if they have been written down the paper is torn up and no further mention is made of them. Sometimes, to give the scrutiny a semblance of authenticity a few minor expenses are disallowed.

In my case too Mr Sebastian intended something of the sort. If he declined to give me a copy of the signed statement it was really for my own good. There was no point letting it be lost and fall into the wrong hands. Not in his wildest moments did he imagine that the threat to lop off half my wealth would be ignored by me. What he did not know of course was that soon after our first meeting I had filed a complaint and a vigilance inquiry had been set into motion. When questions about the case began to be addressed to him he had to quickly cover his tracks. That explains the attempt to backdate previous meetings, and officially set up records calling for information that had already been submitted to him.

More in the next.

Category: Income-Tax


Philip George
Debunker of Keynesian, monetarist and Austrian economics

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