The Supreme Court on Monday castigated the Income Tax Department for its inertia in dealing with telecom companies involved in 2G spectrum allocation scam. The I-T department, however, said that it has issued notices to the companies that have sold their controlling stakes after getting the allotment of 2G spectrum.

A bench comprising Justice GS Singhvi and Justice AK Ganguly expressed serious reservations over department's belated action against the companies after the invervention of the court. The department had come to know about such tax evasions by tapping of the phone calls in 2008 but swing into action only in March this year.

"We are sure they (I-T Dept) would have slept over it otherwise (if it had not intervened). There is no doubt about it," court said. Additional Solicitor General Vivek Tankha, appearing for the department, however, said that the big companies were involved in the case which caused delay in taking action against them.

It, however, failed to cut any ice as the judges remarked that they were "prima facie tax evaders".

"How are they big. What kind of mindset do you have. Prima facie they all are tax evaders. Do not call them big. Do not insult the word," court remarked.

Meanwhile, Tankha told the bench that all telecom companies, which after the allotment of the spectrum, have sold their controlling stakes to foreign firms through the Mauritius route, have been asked to pay tax on the capital gain from such transactions.

"The Director General of International Transactions has already issued notices to them. Some of them have already admitted that they should be taxed in India and we have issued them notices. They have permanent offices in India and they are assessees now," said Tankha.

He sid that the department was following the Vodafone case, where the UK-based telecom giant bought controlling 67% stake in the Hutchison Essar using the DTAA (Double Taxation Avoidance Agreement) route in Mauritius and claimed exemption. However, the apex court had asked the company to deposit 2,500 crore with its registry.

"In such cases, transaction and the beneficiaries were outside India, but the companies were physically present here," Tankha contended.

The bench asked the department to complete the departmental proceedings against the tax-evading firms within the stipulated time. The court had extended the time for completion of the probe in the case to mid July from its earlier deadline of May 31.

It also asked the I-T department to co-operate in the matter with the CBI and ED. The matter will be heard on July 6. (Economic Times)