Is Raghav Bahl paying the price for criticising the Modi Government?

Journalist, editor and media entrepreneur Raghav Bahl can take some solace from the much hyped but little remembered case of Hasan Ali Khan. The Pune businessman was ‘raided’ by the Income Tax department which accused him of tax evasion and fixed his tax liability at a whopping Rs 34,000 crore. Nine years later, the Appellate Tribunal decided that his actual Income Tax liability with penalty was just Rs 3 crore!

So, no matter what the Income Tax department decides Bahl owes to the Government, following surveys and searches at his residence and offices of Quintillion Media Pvt Ltd. which runs the website The Quint, there is always a good chance that the figure would come down to realistic levels over the years.

Tax evasions are becoming easier to detect following digital prints and documents available with courts, banks and other agencies. And in most countries with an efficient tax machinery, ‘raids’ are an exception than the rule. A handful of experts are all that is needed to establish such evasion.

But in India, such ‘raids’ by dozens of Income Tax officials, accompanied by the police and the media, are designed to send out a message to the neighbourhood and the people at large. Selective leaks to the media follow, unsubstantiated and anonymous sources are used to make exaggerated and unattributed claims, which fizzle out over the years.

The Editors’ Guild of India has rightly voiced concerns and declared that it suspected the raids were designed to muzzle dissent and divert attention from issues embarrassing the Government in the last few days. Because Bahl has been an outspoken critic of the Government, and he has not been mincing his words. This is hardly one would expect from a tax evader with legitimate fear of government agencies hounding him.

Ironically, it was Narendra Modi, who used the term ‘Tax terrorism’ in his address to the members of the Federation of Indian Chambers of Commerce and Industry (FICCI) in January, 2014. Among other things, he declared, “The tax terrorism prevailing in the country is dangerous. One can’t run the Government by thinking that everyone is a thief.” Five months later he became the Prime Minister.

Arun Jaitley, who was to become the Finance Minister, echoed similar sentiments and accused the UPA Government of unleashing tax terrorism in the country. The term used by them has gained currency since then and even die-hard supporters of the Modi Government like T. Mohandas Pai, was forced to acknowledge in The Economic Times earlier this year that ‘tax terrorism’ had increased under the NDA Government.

Experts pointed out that while a sum of Rs 2.87 lakh Crore was locked up in appeals and disputes in March, 2014 in the Central Income Tax Tribunal, the figure spiralled to Rs 6.11 lakh Crore at the end of March, 2018. The disputes were due to unrealistic targets, they felt, and with the Government having empowered Income Tax authorities with coercive powers of arrest and enforcement, the department has been under pressure to increase collections.

Yet another pattern is clearly discernible. The Income Tax ‘surveys’ and ‘searches’ , loosely called raids, have increasingly been conducted against political rivals and relatively minor media houses. Crony capitalists, who arguably could be evading a lot more in taxes, are seemingly spared while medium and smaller industrialists and businessmen have borne the brunt of the department’s hyper activity.

What’s more, the media industry undergoing cataclysmic changes require deep pockets but returns to the investment are rather slow in coming. The digital media in India are still exploring an effective revenue model which would make readers pay and be attractive for advertisers to invest in. Therefore, it is facile to assume that Bahl’s media enterprise has been raking in a great deal of income.

How does the Income Tax department know that people are evading taxes? Obviously from transactions. When people claim to have earned ‘X’ amount of money and pay taxes on it but are found to have spent and invested a lot more, they are accused of having evaded their tax liability. The department is equipped to track bank transactions including withdrawals as well as consumption and investment patterns.

And unless the department has information that much of the undisclosed income is kept in cash, there is rarely any need to conduct ‘surveys’ and ‘searches’. A summon to the tax payer to produce books of accounts, other details and bank statements ordinarily would suffice.

But the Government has clearly other designs.