A report in the Caravan set off a political storm on Friday, with both the Congress and the Bharatiya Janata Party holding press conferences to trade charges. The story claimed that an Income Tax officer had written to Union Minister Arun Jaitley asking whether the department should investigate a diary that was allegedly kept by former Karnataka Chief Minister BS Yeddyurappa in which he detailed huge payoffs made to senior BJP leaders and others.

Yeddyurappa has denied the allegations and claims that the diary was fabricated. The Congress, however, argued that there was enough information for an investigation to be carried out. It said that the newly appointed Lokpal ought to do it. The Central Board of Direct Taxation, which runs the Income Tax department, also issued a statement, saying that it had indeed investigated the diary and found nothing substantial in it.

With elections around the corner, the charges will undoubtedly be used to score political points especially against the BJP, which claims that it runs a clean operation compared to the corruption taint that brought down the previous Congress-led government. But there are a number of unanswered questions.

Here’s a quick explainer.

What does the Caravan story say?

The story alleges that the Income Tax department is in possession of diaries maintained by Yeddyurappa in which he lists out, in as many words, payoffs allegedly made to various BJP leaders, including Union Ministers Arun Jaitley, Rajnath Singh and Nitin Gadkari. According to the report, the diaries refer to alleged payments made in 2009. The report also includes the scan of one document, in Kannada, that has the specific numbers: Rs 1,000 crore to the BJP’s Central Committee, Rs 150 crore each to Gadkari and Jaitley, Rs 250 crore to judges and so on. According to Caravan, each page of the document is signed by Yeddyurappa.

What did Yeddyurappa say?

The BJP leader made a short statement to the press claiming that the documents were forged, and said that he would file a defamation case against the Congress for false charges.

If real, why would he keep a document like this?

The story suggests that Yeddyurappa wrote these entries during the period when he had broken away from the BJP. In 2011, after Karnataka’s anti-corruption watchdog indicted him in a case involving alleged kickbacks, Yeddyurappa had to step down as chief minister and was dismissed from the BJP as well. The article mentions that local media reported on a turf war between Yeddyurappa and Karnataka BJP leaders at the time, which may explain why Yeddyurappa had such a document.

How did the Income Tax office get it?

According to the story, the Income Tax department found the diaries among papers that were seized from the home of Congress leader DK Shivakumar in raids conducted in 2017. Shivakumar was raided at the time he was attempting to keep Congress MLAs together in the aftermath of a fractured verdict following state elections in Karnataka and trying to prevent them from being poached by the BJP.

This part of the story was later confirmed by the Central Board of Direct Taxation in its release, which said during the raid on Shivakumar, “some loose papers were given to the raiding party. They were a xerox copy of Karnataka Legislative Assembly, Legislator’s Diary pages of 2009 with details of numerical entries against some individual names.”

What else do I need to know?

A key aspect of the Caravan story is the allegation that a senior income tax official wrote to Finance Minister Arun Jaitley, offering details about the case and asking whether further investigations should be carried out. The unsigned note allegedly includes some potentially incendiary details. At one point, for example, it allegedly said that the IT department “protected the interests of the BJP leaders. Since this matter is connected to the BJP leaders of Karnataka and also in Delhi, no further investigation has been done till date.” It also claimed that BJP national leaders had been attempting to use the IT department to break the Congress-Janata Dal (Secular) government in Karnataka.

It asks whether the “original diary” should be procured and a case should be filed for investigation by the Enforcement Directorate or another appropriate agency, and says “legal opinion is sought”. The I-T department functions under the Finance Ministry, which Jaitley heads. According to the Caravan report, Jaitley – whose own name allegedly turns up in the diaries – did not reply and no investigation was carried out.

How has the government responded to this allegation?

Neither the Central Board of Direct Taxation nor the Union Minister Ravi Shankar Prasad in their statements about the issue mentioned the letter by the senior income tax official.

The CBDT statement, however, disputes the suggestion that no investigation was carried out. Instead, it claims that the documents were a part of “loose papers” that the raiding party found in Shivakumar’s house.

It also mentions details about what happened afterwards:

  • The department claims it questioned Shivakumar about the papers, to which he said he received the papers since, as a politician, he procured information about other politicians and parties.
  • When asked why he did not take the papers to authorities, the CBDT claimed that Shivakumar said, “As he did not know about the genuineness of the said loose sheets, he did not inform the same to enforcement agencies.”
  • The department claims it also questioned Yeddyurappa about the papers. The BJP leader, according to the CBDT account, said he is not in the habit of keeping a diary, and denied that it was his handwriting or signatures on the sheets.
  • “He also provided a sample of his handwriting in order to verify the genuineness of the said loose sheets,” it said.
  • The department also said it sent the sheets to the Central Forensic Science Laboratory in Hyderabad, but those could not be examined as they were not “in original”, and Shivakumar did not give any original documents.

It concludes:

“It is clear that for a forensic analysis of the disputed writings to establish its evidentiary value, originals of the same are required. All efforts have been made by the Income Tax Office concerned to procure the originals of the disputed writings. However, the details about the place and custody of the original writings and, if the original writings exist, are not available. The same loose sheets prima-facie appear to be of a doubtful nature and were given by the person who was being raided for tax violations.”

What now?

It is unclear where this goes from here. The Central Board of Direct Taxation has already claimed it made “every effort” to examine the document and found it to be “of a doubtful nature”. And since the “original” diary is unlikely to turn up, the matter is likely to remain at this stage, with allegations on one side and a denial from the other. The case might even turn up in the Supreme Court, but considering its decision on the Sahara Birla papers, which also involved “loose papers”, it may not recommend further investigation.

A few questions do come up:

  • Is this “unsigned cover note” from a senior Income Tax official to Jaitley genuine? Will the government, or the minister, confirm or deny having received such a note?
  • Will this unnamed Income Tax official speak up about the matter?
  • What does the Income Tax department mean when it says “all efforts” were made to procure the originals? What investigation did it actually carry out? Did it seek to match the movement of money?
  • Why did DK Shivakumar not take the papers to the authorities or the press? If the Congress is convinced about the matter now, why was it unconvinced earlier? What changed? (The Caravan story suggests Shivakumar did not, because his “relationship with Yedyurappa was good”, according to the IT official’s note).