Govt likely to challenge ITAT ruling on Bofors case

New Delhi, Feb 7 (PTI) The government is likely tochallenge the Income Tax Appellate Tribunal ruling on Boforscase in the Delhi High Court for its remarks against theIncome Tax department.

Though government was not a direct party in the case,based on the opinion of Attorney General Ghoolam Vahanvati,the Law Ministry is understood to have asked the FinanceMinistry to challenge the ITAT ruling as it contained certainremarks against the Income Tax department.

The tribunal had said that commissions were paid tolate Win Chaddha and Italian businessman Ottavio Quattrocchiin the Bofors gun deal in the nineties.

"In our view, to enforce the rule of law, these stepswere desirable to bring all the relevant income tax violationsto the logical end by the income tax department. Inaction inthis regard may lead to a non-existent undesirable anddetrimental notion that India is a soft state and one canmeddle with its tax laws with impunity," the tribunal had saidin its 98-page order.

Vahanvati is learnt to have told the Law Ministry thatthe Income Tax department, which comes under the FinanceMinistry, should challenge the ITAT order in the Delhi HighCourt for removal of the remarks by the tribunal against theIncome Tax department in its December, 2010 order.

The appeal will be restricted to the stricturesagainst the I-T department only. It will not touch upon theissue of any private person who had approached the tribunal ontaxation matters.

The tribunal in a ruling on an appeal filed byChaddha''s son, Hersh W Chaddha had concluded the arms dealerhad got Rs 52.6 crore as kickbacks and Quattrocchi got USDseven million (around Rs 13 crore).

In response to a reference from the Finance Ministry,the AG is learnt to have stated the tribunal had oversteppedits jurisdiction.