The government is planning to challenge the Income tax Appellate Tribunal's ruling in the Bofors gun deal. The tribunal had concluded that commissions were paid to arms agent, the late Win Chaddha and Italian businessman Ottavio Quattrocchi, in a deal that kicked up a storm in the late 1980s.
Armed with an opinion from the government's top law officer, attorney-general GE Vahanvati, the law ministry has asked the finance ministry to file an appeal in the Delhi high court for removal of "sweeping remarks" by the tribunal against the income tax (I-T) department in its December 31 order.
"We have recommended that the I-T department, which is under the administrative control of the finance ministry should ask for expunging (removal) of the unwarranted remarks made against it in the tribunal order," said a ministry official.
He said the ministry has confined its opinion to the "strictures against the I-T department and has nothing to do with the tax issue of an individual who had approached the tribunal". The tribunal in a ruling on an appeal filed by Chaddha's son, Hersh W Chaddha — had concluded the arms dealer had got R52.6 crore as kickbacks and Quattrocchi got $7 million (around R13 crore).
It had slammed the I-T department for failing to act against the two for tax evasion and had ruled Chaddha and Quattrocchi were liable to pay tax in India.
Hersh W Chaddha had approached the tribunal against the I-T department's order to levy tax on an undisclosed commission allegedly received between 1987 and 1989. W Chaddha died in October 2001.
In response to queries by the finance ministry, the attorney general is understood to have stated the tribunal had overstepped its jurisdiction. Vahanvati has said the tribunal made sweeping and generalised remarks even against individuals who had nothing to do with the appeal.