The Law Commission of India has suggested drastic measures against such offenders. In the Commission’s observation the tedious prosecution process involved in the trial of such cases frustrates the cause of justice and often results into unjustified acquittal due to defective report of the analyst or delay in examination of samples or lack of legal expertise etc.
The complexity of tax laws in India has provided sufficient scope for the tax-payers to evade taxes. The evasion is more common with influential categories of persons such as traders, businessmen, lawyers, doctors, engineers, contractors etc. The main difficulty posed before the Income Tax Department is to know the real and exact income of these professionals.
It is often alleged that the actual tax paid by these persons is only a fraction of their income and rest of the money goes into circulation as ‘black money’. Despite frequent modifications in the tax-laws of the country the menace of tax-evasion continues unabated and it is causing considerable loss to government revenue.
The Supreme Court in its majority decision in R.K. Garg v. Union of India upholding the validity of the Special Bearer Bonds (Immunities and Exemption) Act, 1981, observed that the Act was not intended to encourage tax evasion in future and condone such evasion committed in past but the real object of the Act was to launch a nation-wide search to unearth undisclosed wealth by encouraging small incentive to those who declare their undisclosed cash. The main intention was to unearth ‘black money’ so as to prevent further loss of government revenues.
It may be pointed out that the problem of generation of black money (unaccounted money) and its proliferation is not new. The Government of India has formulated voluntary disclosure Schemes to unearth the black money specially to be used for certain social objectives. But the results of these schemes have not been very encouraging.
The main reason for unsatisfactory response to these schemes seems to be that tax payers do not want to be identified as having evaded the tax in the past and the fear of re-opening of their past assessments and facing roving enquiries also dissuade them from resorting to these schemes.
It is significant to note in this context that what constitutes crime is ‘tax evasion’ and not the ‘tax avoidance’. Though both these terms appear to be synonymous, there is a fine distinction between the two. While the former implies non-payment of tax due to be paid, the latter signifies arranging the spread over of one’s income in such a way that it does not incur tax liability legally and lawfully.
It may be stated that the Government has introduced various regulatory legislations such as the Essential Commodities Act, 1955, the Industrial (Development and Regulation) Act, 1951, the Imports and Exports (Control) Act, 1947, the Foreign Exchange (Regulation) Act, 1974, Companies Act, 1956 as amended from time to time, the breach of which results in white collar criminality. A large majority of white collar crimes are, however, operating within the letter and spirit of the law and, therefore, do not call for legal action.