the only way bitcoin really helped int his case, was because it can used to make international transfers. one could as well used cash if it were inside India.
i think it is reasonable for the govt. to know who is using bitcoins after all. just because they know who is using it, doesn't mean everyone has done something wrong. i really don't see what is wrong in using bitcoins if not used for illegal purposes. of course, paying taxes is something everyone should take care of.
The problem was not with bitcoins. The problem was with the source of cash used to buy bitcoins - they were obtained illegally. The question is whether Pankaj knew that the cash was obtained through illegal means. The police believe he knew.
I.e problem was with credit cards. Bitcoin ain't the culprit here. CCs are.