New Delhi: Union Finance Minister Arun Jaitley on Wednesday questioned AAP on the "dubious funding" issue saying political donations made through cheques "do not purify the transaction" and wondered what party chief Arvind Kejriwal would have done as a revenue official to deal with it. Putting a question mark on political donations made to AAP through cheque, he said it "does not purify the transaction".
"Surely, Kejriwal is not a stranger to the tax laws. He knew what his party was doing. He should be honest enough to tell the people what 'Avind Kejriwal, IRS' would have done under these circumstances?," Jaitley said in an article "What would Arvind Kejriwal, IRS have done?" on his facebook post.
He also alleged, "The AAP is a brilliant propagandist. It claims to wear the label of honesty on its sleeves." Jaitley asked Kejriwal if payment by cheque to political parties "forgives all sins of blackmoney conversion?"
"Would he have asked the assessee to write a letter to the Chief Justice of the Supreme Court or allowed him to argue that a payment by cheque to political parties forgives all sins of blackmoney conversion? Would he have arrested the fraudulent assessee under the Indian Penal Code rather than proceeding under the Income Tax Act?," he questioned. Jaitley said, the only fact that the donations have been made by cheque "does not purify the transaction" and noted that withdrawal from Swiss bank accounts can also be made by cheques.
He said when a political party converts blackmoney into white, its receipt would obviously be by cheque. "That cannot wash away the sins of the convertor or the recipient since the entire transaction is fraudulent and a tax evasion exercise. Arvind Kejriwal is not a novice to India's taxation laws. He is a former officer of the Indian Revenue Service.
"He knows very well that such transactions are dealt with under the Income Tax Act and not the Indian Penal Code. "Why does he then dare the Finance Minister to arrest him? Is it only a bluff and bluster exercise?," the Finance Minister asked.
Citing law, he said a company can donate a maximum of 7.5 per cent of its average net profit of the three preceding financial years to political party and asked AAP if it had verified this fact before accepting the payment and whether it verified the controlling interest behind these companies. "Can it even now tell us who was the individual who brought these donations and whether he had the financial resources to pay or was it a round tripping of its cash available?," he said.
Jaitley said some disillusioned members of AAP have taken up the case of the party's dubious funding and disclosed the names of a large number of corporate entities from whom it received donation by cheque. The disillusioned AAP members, he said, appear to have conducted a search of these with the Registrar of Companies and it uncovered the curious character of the donor companies.
He said the companies making donations to AAP do not do any business or profits from any legitimate business and accused them of being "Entry lending companies". Explaining the functioning of such companies, he said, at times there are a large number of inter-connected companies created through a multi-layering process and money is got transferred from one to another.
These companies are registered at obscure addresses and the directors of these companies are unknown people, "usually name lenders for a minuscule consideration", the Minister claimed.
"These directors are usually low paid employees of those behind the racket. These companies are used either for hawala payments or round tripping of their own funds. They convert cash into cheque," Jaitley said. Jaitley said most of these ingredients are present in the case of companies which are donors of AAP and questioned that a political party would surely attempt to know as to who the controlling interest behind these companies are when when a company donates lakhs and crores to a political party.
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