B.R. Balakrishnan, or ‘Bala sir’, has been a transformative influence on income tax department of Bangalore. As admiral of our ship, he has steered the ship into waters never explored hitherto. In the process, we have seen leadership style that has brought out the best in his subordinates and has led to enhanced efficiency and effectiveness of the organisation.
A strategy for demonetisation
Upon taking charge as DG- IT (Investigation) of Karnataka and Goa region in 2016, first major step of Bala sir was to fill up all posts in the investigation wing. He cajoled the administration and managed to fill most posts. This capacity building was critical to the Wing; big search & seizure operations cannot be mounted with a thin manpower. Thereafter, he rationalised the distribution of intelligence among officers. STR cases, foreign intelligence cases, ICIJ cases and various haven-centred leaks were handed over to units on the basis of their past expertise. This helped units and sub-units develop specialisation in different areas.
And then came demonetisation. Although a unique opportunity, it came out of the blue for the department. We do not know if anyone in the department was in the loop, but field offices were caught unawares. As a result, field offices were starkly unprepared. No intelligence of significance was at the disposal of field offices on November 8, 2016.
But Bala sir immediately came up with a game plan. He asked all units to identify ‘conversion agents’ and keep them under surveillance. Conversion agents are touts and middlemen who converted old notes into new notes for a commission that ranged anywhere from 10% to 40% of the amount being converted. He reviewed various dossier files and surveillance results and immediately zeroed in a case for S&S operation. A search was mounted on two engineers employed with the state government within weeks of demonetisation, and cash in new currency of Rs. 5.70 Crs was hauled up from a single premise. This caught the fascination of the entire nation, and citizens watched with bated breath how people in power managed to hoard pink notes just days after demonetisation.
This search also had significant demonstration effect. Major critique of demonetisation as a policy step was that money is not static but dynamic; black money is not hoarded but brought back into the parallel economy for business. Results of this search proved that black money hoarded is comparable in size to black money pumped back into the parallel economy.
Bala sir followed up this search with many intel-driven searches. These other searches complemented the findings of the search on engineers – they proved the involvement of middlemen in converting old notes into new notes. Bangalore took the clear lead in income tax department in harnessing demonetisation.
Bala sir gave high priority to data – probably a fallout of his experiences as Director (intelligence & Criminal Investigation) in Mumbai. He and Pr Director Vyawahare sir propelled all units to crunch bank data of demonetisation period in the first quarter of 2017. Many searches in this period on finance companies and jewellers were a result of high quality data crunching by the Wing. This action again came to the rescue of demonetisation as a policy. By now, it was clear that most demonetised notes had been converted through RBI. Many critics pointed that this was proof of the failure of demonetisation. But no! Just because money is back into the system does not mean that it is all white money. Post facto investigation of bank deposits reveals whether the money is black or white in character. Bangalore Wing under Bala sir again led the way in post-demonetisation phase.
Politically sensitive searches
After the success of demonetisation-phase searches, Bala sir shifted his focus towards mofussil stations. In fact, his focus remained multi-layered all the time. He always motivated me to process cases of Multinational Corporations (MNCs) and software companies, while he was open to cases on the regular suspects: builders, contractors, and hawala dealers. However, this intense focus on mofussil stations was singularly his.
Problem with mofussil areas in Karnataka, as in anywhere else in the country, is that there is a strong politician-businessman nexus. Most often, the leading business proprietor is also the strongman of the local area. Top political leaders mostly hail from business families. Wherever political leaders are not into business, they run medical colleges and schools under a so-called charitable trust.
This is a social fact of rural hinterland of the country. During my tenure in investigation wing in Bhubaneswar, I profiled the top businessmen district-wise, and found (quite unsurprisingly) that they are politically active in some national or regional party.
However, when officers from mofussil stations approached Bala sir with interesting cases, Bala sir examined the cases purely on merit. His focus was on the undisclosed income and assets identified by investigating officers. He was absolutely not concerned about political affiliation, if any, of promoters of these companies. Having been part of some of these fascinating searches, I realised what the phrase without fear or favour actually means.
These mofussil searches were absolute fun. It is very difficult to mobilise manpower in mofussil stations without compromising the secrecy of the operation. As a result, our officers in mofussil stations lodged us in interesting off-beat places before searches. Searches were sensitive, as we were up against the might of the local strongman. But Bala sir had established himself as a no-nonsense officer not to be messed with. Local political establishments rarely dared interfere in our conduct of duty. The few times that they had us in a spot, Bala sir personally intervened with the DG of Police and ensured adequate safety for the teams.
A fallout of these searches was that certain political parties cried foul. Searches were conducted on businessmen of all hue and colour; of all ideologies and political identities. But it is easy for parties to make any accusations. Some parties accused Bala sir of partisan behaviour. A letter was written by a political party to the Election Commission of India (ECI) during 2018 Assembly elections, requesting ECI to replace Bala sir. It was signed by many top leaders of the party, principal among them being the then Chief Minister of the State.
During the 2019 National Elections, the then Chief Minister and top ministers barged into income tax office and demonstrated against enforcement action of the department, In the midst of these, it is hats off to Bala sir that he maintained his cool and spine. He was both fearless and composed. Such manoeuvring did not intimidate Bala sir. He remained unnerved.
There is an important lesson from this episode for any bureaucrat in a leadership position. In an enforcement role, you are bound to brush the powerful and the wealthy the wrong way. They will, more often than not, try to strike back. But if you are right at your place, they cannot disconcert you.
Bala sir has himself articulated to his officers that the intention behind his actions was to assert the legitimate authority of the department to curb black money and bribing of voters with utmost professionalism. The fact that politically active persons attacked him with viciousness and venom actually strengthens his legacy as a man who brought transformative changes to Karnataka’s society and polity.
Both expert and enthusiastic
I have met many senior administrators and senior managers who harp on ‘man management’ as the key role of an organisation’s head. Somehow I could not find consonance with this view, for pure man-management does not lead to excellence. Officers who hold the post of Chief Commissioner or Director General in income tax department are selected from among the Indian Revenue Service (IRS) cadre. Since all IRS officers have worked in income tax department for most of their career, they are expected to be experts in the field.
Yet, expertise does not come easily to officers of income tax department. The law is dynamic and changes every year. Tax law changes drastically in a matter of just a decade. Financial transactions are becoming more and more complex everyday. Means of tax avoidance are limited only by the creativity of accountants; modes of evasion are limited only by the creativity of entry operators. In such an ever-changing and dynamic world of finance, Bala sir is a role model of technical competence.
Bala sir takes personal interest in each case, and has all the facts at fingertips. He does not just review investigation reports and statutory notes; he adds value to them. In this process, he shares rich insights from his earlier stints in Mumbai and Chennai. Right from complex structuring issues to issues of on-money payment; from round tripping of funds through multiple borders to bogus purchase bills, he is into the thick of all modus operandi. Here is another strength of Bala sir. Many officers of the department become super-specialist in corporate investigations or transfer pricing audits or cross-border transactions (basically different parts of the elephant we call IT department). While they have their own utility, they lack the power that Bala sir has: the ability to look at the elephant both on macro and micro levels.
This is where, I feel, Bala sir commands utmost respect from his officers. He has an ability to visualise financial statements and loose sheets into a complex web of financial transactions. This emanates from his attitude to keep learning and questioning. One other factor that probably helped sir look at the micro and macro at the same time is his attitude towards intelligence. Bala sir maintained close coordination with other intelligence and investigation wings of the government of India. He used to actively share actionable intelligence with other agencies, and such action was duly reciprocated. As a result, whenever we subordinates met him with an under-developed case, he would marshall intel from other agencies and give us.
A nurturing administrator
I got my Junior Administrative Grade promotion few months after Bala sir was given the role of Pr Chief Commissioner of Income Tax (PrCCIT). As PrCCIT, he was now head of the entire Income Tax department in Karnataka and Goa. Very soon I joined a newly activated Special Range as both range head and assessor.
As the Chief, he drew a battle-plan for enthusing the administration. While he tasked his headquarters with infra-related work, he propelled assessment charges in the field formations to target excellence. In order to motivate officers in the field, he arranged conferences in which officers gave feedback about enquiries and investigated conducted by each. Officers were encouraged to share their quality assessment work with other officers and with him. This activity was done in a non-disciplinarian atmosphere in the months of September and October in 2018.
Scrutiny assessments often go unnoticed. Mostly, the compliments that an Assessing Officer (AO) gets are from CIT Appeals and departmental representatives in ITAT – that too years after passing orders. As a result, many AOs do not feel enthused to give their best to an assessment cycle. Nor do many AOs plan in advance to generate quality assessment orders. Bala sir’s approach to directly interact with ‘the team’ of range officers and assessing officers fuelled a renewed sense of purpose in AOs. This is a leadership style worth emulating in tax administration: properly communicate your vision and role of each officer in executing the vision.
Interestingly, Bala sir placed enhanced focus on the Direct Tax Regional Training Institute (DTRTI) and its activities. He made frequent trips to DTRTI for inspection and brainstorming on skill enhancement of officers and officials. He supervised and participated in a lecture series on issues in corporate assessments in BMTC Building office months before end of assessment season. Many new topics and modules were introduced by DTRTI on his instigation.
But the reason most officers in the field remember him is because of his responsiveness. He would promptly respond to any question or query asked to his headquarters. He personally responded to questions thrown by officers much junior to him in whatsapp groups. On one occasion, I remarked in a group that a CBDT circular on stay matter was ambiguous. He phoned me and took a briefing on the issue. Two days later, his PS communicated to me that sir has highlighted the issue to CBDT.
His responsiveness does not stop here. He has taken personal interest in problems brought by officers to him. His focus on infrastructure development has given institutional benefit to the organisation.
Bala sir retires on the 31st of July, 2019, after an eventful stint at the helm of affairs in Income Tax department of Karnataka & Goa. The transformations he brought are not limited to the organisation only; they have positively affected the polity and society of Karnataka at large.
Swain is an officer of the Indian Revenue Service (IRS), and author of the bestseller ‘Loophole Games’. Views expressed are personal.