First Stirrings

Tax Man

TN Pandey had some interesting experiences during his long tenure in the Indian Revenue Service

trilok-nath-pandey-irs

IT was peer pressure and ease of doing studies which brought Triloki Nath Pandey, son of Chandra Nath Pandey, an accounts officer in British India Corporation at Kanpur, to Indian Revenue Service (IRS).

Pandey was teaching commerce in DAV college, Kanpur, when he appeared for Union Public Service Commission (UPSC) examination for the IRS in 1954.

“Being a lecturer, I got three months of annual vacation and had college library at my disposal. Moreover, all my friends and peers appeared in the examination. Two of them, in fact, made it to the IRS and one made to the IPS in the same year”, TN Pandey, now 85, recollects.

After joining IRS as probationer, he could not take up the next year’s IAS examination (with two extra papers) because of the rule at the relevant time that those, who wish to take up IAS examination, will have to resign from their present Central Service job. He could not take that risk. Hence, continued in the Revenue Service.

His first posting as Class I ITO was in Nagpur (Maharashtra) followed by stints in Sitapur, Kanpur (Uttar Pradesh) and Union Ministry of Finance. Subsequently he was sent on deputation to Calcutta as Joint Director (Inspection and Investigation) in Department of Company Affairs. During the two-and-a-half years of his posting, he detected a number of frauds in the public and private sector through his common sensical approach.

During inspection of receipts of a jute company, he found that it paid wages to most of its labourers after taking their thumb impressions. Only a few had signed against the payments. One of the signatories happened to be one Vimal Das. Pandey knew Bengalis do not use word V and instead write B for it. He confronted the management with this and the bogus nature of payment was accepted. Subsequently, he found a large number of other bogus payments shown as wages. He reported the matter to Company Law Board, which, in turn penalised the company.

From Company Law Department, Pandey moved on deputation to newly set up Monopolies and Restrictive Trade Practices Commission, New Delhi, set up under the MRTP Act, 1969, as Deputy Secretary for nearly six months and then was promoted as Secretary to the Commission

On another occasion, he discovered that a private company’s Managing Director and other officials travelled to Delhi in AC 1st class by train to attend marriage of MD’s brother and billed the company. “A marriage party travelled on company’s account. Once the deception was proved the company recovered the amount from the MD”, he remembers. The concept of inspections and investigations under the Companies Act 1956 was reoriented in the Company Law Department during his period of deputation.

From Company Law Department, Pandey moved on deputation to newly set up Monopolies and Restrictive Trade Practices Commission, New Delhi, set up under the MRTP Act, 1969, as Deputy Secretary for nearly six months and then was promoted as Secretary to the Commission, where he did pioneering work for newly set up body, unprecedented in the history of the country by drafting its Rules, Regulations and court procedures, inter-alia, assisting the Commission in the conduct of its enquiries regarding Monopolies in the country for checking their monopolistic trade practices.

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During Emergency imposed by Prime Minister Indira Gandhi, Pandey served first as Deputy Secretary and then Secretary in Monopolies and Restrictive Trade Practices (MRTP) Commission. As Secretary, Pandey made a major contribution to the drafting of rules and regulations for the new body and set up procedures for the Commissioner’s hearings.

When Morarji Desai-government came into power in Delhi Pandey was appointed Commissioner (Inquiries) in J C Shah Commission which was formed to look into ‘excesses, malpractices and misdeeds committed during the Emergency by political authorities, public servants and their friends…’ Commission’s Secretary PR Rajgopal, an IPS officer, assigned him challenging enquiries, which Pandey carried out to the utmost satisfaction of the Chairman of the Commission, a former Supreme Court judge.

IT, however, appears the posting proved to be his biggest handicap during the subsequent part of his career. The Congress party regarded his 10-month stint with the commission a major disqualification.

When Indira Gandhi government returned to power it formed a committee headed by a UPSC member to review the ‘outstanding’ grade given to him in the IT Department for Commissioner of Income Tax post. The committee comprising of the then Member, UPSC (a former CBDT Chairman), the Chairman and two members of the CBDT changed his grading from ‘outstanding’ to ‘very good’. He fought against the blatant injustice for almost seven years and ultimately a second review committee of the UPSC restored his ‘outstanding’ rating in Commissioner’s grade.

However, the alleged persecution also had a flip side. He was sent to Harvard Law School for doing a 10-month diploma in international taxation. Along with the diploma, he also completed LLM from the school.

In 1979, he was appointed Deputy Director (Investigation) in the IT department at Delhi. During this period, a search—perhaps the only one in the entire history of the income tax—was conducted on businessmen in Srinagar. The search party was chased away by local people with state government giving no assistance and raid proved to be unsuccessful.

When Indira Gandhi government returned to power it formed a committee headed by a UPSC member to review the ‘outstanding’ grade given to him in the IT Department for Commissioner of Income Tax post

Subsequently, on promotion he was appointed Income Tax Commissioner (Appeals) at Lucknow. Here, during the course of an appeal, it was found that a businessman claimed tax rebate of Rs 10 lakh on a scientific research machinery, which was not meant for scientific research. He disallowed the claim after making necessary enquiries from the seller of the machinery, who confirmed that that the machinery was not for scientific research and was for ordinary business. Penalty was imposed on the businessman for wrong claim.

During the period, he served as Commissioner Income Tax (Adminis-tration) in Agra, he came across an interesting case during search proceedings. The IT sleuths were tipped off by son of a jeweler that his father had hidden a box of gold in a well. Pandey says his team pumped out water from the well and found a box but there was no gold in it. In all Probability, the jeweller got to know about the raid in advance and emptied the box.

From the CIT (Administration), Agra, he moved to Commissioner of Income Tax, Delhi-II. When he was working as CIT-II, Delhi, he was promoted as Director General (Administration) at Delhi.

THE Shah Commission stint returned to haunt him when Rajiv Gandhi government ignored his claim on the post of Chairman CBDT despite a UPSC Departmental Promotion Committee (DPC) for Chief Commissioner’s cadre having given him an ‘outstanding’ grade, superseding officers from 1951, 1952 and 1953 batches.

When Vishwanath Pratap Singh replaced Rajiv Gandhi as the Prime Minister of the country Pandey was appointed Chairman CBDT, with six months extension in the status of Special Secretary to compensate him for the injustice done to him. The practice of trusting taxpayers in 99 percent of the returns filed by them now in vogue was conceptualized and put into practice during the period, Pandey was Member (Legislation) and Chairman, CBDT.

Pandey retired on December 14 in 1990 and is continuing his academic work by writing in different pink newspapers and reputed journals on tax, Company Law and GST matters.

His wife Usha Pandey passed away in 2004 and their three daughters are well settled in the national capital.

As told to Narendra Kaushik

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