The Central Board of Direct Taxes (CBDT) is averse to dilution of the income tax department’s power to tap phones of suspected tax evaders. In an exclusive interview with Governance Now (read the full interview in the May 1-15 issue), CBDT chairman Sudhir Chandra has said that phone tapping has served as an “important aid” to corroborate evidence against illicit money.

Chandra’s response assumes significance in view of the fact that there is a concerted move within the government to withdraw the IT department’s power of phone tapping. The IT department was given the power only in 2006 against a certain background and a set of circumstances.

The CBDT chairman argues that there has been no significant change in those circumstances that should prompt a rethinking. “I do not see even the slightest change in the background against which the power of phone-tapping was conferred on us in 2006 by the government in its full wisdom. This explains my position,” Chandra said.

The country’s biggest financial scam – the Rs 1,76,000 crore 2G giveaway, was unearthed as a result of the IT department’s tapping of Niira Radia’s phone as part of its investigation into her suspected tax evasion. The exopse laid bare corporate India’s hold on and manipulation of the country’s public policy. An unnerved India Inc has since raised concerns over privacy and how it could spoil the business environment in the country.

Seizing on a supreme court observation that phone tapping should be allowed only in situations of public emergency, national security and public safety, the Union Home ministry has mooted the proposal that phone tapping powers should be vested only with criminal investigation agencies such as CBI and national security agencies such as IB, RAW and not with agencies dealing with financial fraud such as the IT Dept.

This is at variance with the home minister’s P Chidambaram’s statement in parliament that the government agencies were “fully authorised to tap the phones of suspected tax evaders”. Additionally, Chidambaram was the finance minister in 2006 when the power to tap was sought and given to the IT department. Hence the home ministry’s rethinking seems to have had some recent provocation. Following the home ministry’s public views on the issue, last week, even the cabinet secretariat came out with a statement that suspected tax evasion does not amount to a sufficient reason for phone tapping.

It is worth noting that the supreme court has the drawn the boundaries for the use of phone tapping because of the serious nature of infringement of personal privacy involved but the interpretation that suspected tax evasion does not fall under “national security” or “public emergency” is entirely the governments. And it is contestable. “There is a definite link between the illicit money and a wide range of criminal activities that impinge on national security,” Chandra said, “In many cases we have come across huge stashes of money coming from dubious sources. There are also cases in which monies earned through illegal means in India are siphoned off to tax havens and routed back from there. How can we be so sure such illicit monies will not be used for terrorism or subversive activities?”

Chandra told Governance Now that tapping has helped the department immensely in its new policy of “360 degree profiling” of suspected tax evaders. “It (phone tapping) is a very effective corroboration of our ongoing investigation. We do not go merely by the recorded conversation of a tax evader,” Chandra said pointing out that they have been able to recover Rs 30,000 crore of black money in just two years because of this approach.

The CBDT chairman spoke candidly on a wide range of other issues as well in the interview. These include the functioning of the CBDT, image-deficit of the IT department and efforts on the part of the CBDT to regulate the flow of money through dubious sources based in certain tax havens. Under Chandra’s charge, CBDT has realised Rs 4.5 lakh crore as tax revenue against the target of Rs 4.46 lakh crore revised estimate set by the finance minister.