DIRECT TAXES
| How confidential are the income-tax returns Mon, 25 Apr 2011 |
| QUESTION: It is understood that information regarding income-tax matters relating to a person can be sought by anybody under the Right to Information Act, 2005. Is this inference correct? ANSWER: Information relating to a taxpayer was once treated as secret. Sec. 137 had prohibited disclosure of any information not only relating to the return but also any accounts, documents, statements, affidavits and depositions made during the course of assessment. So was any information relating to recovery of tax. The only exceptions were in matters of prosecution or any disclosures necessary in the course of the proceedings under the income-tax law or for purposes of protection of officers from any civil suit or for sharing information with Comptroller and Auditor General of India in the discharge of his duties or for purposes of any enquiry against the conduct of a public servant or for enforcement of any law as for Indian Stamp Act, 1899 and Sea Customs Act, 1878, or for purposes of Reserve Bank regulations or such other information that may be required under the Central or State law. Prosecution was provided for breach of such right to secrecy against any official of the Income-tax Department with the previous sanction of the Commissioner. It was, however, later felt that this provision provided a shelter for tax evasion and that information as may be necessary for purposes of checking the return as to its correctness should not be shut out by keeping the income-tax return secret so that the Finance Act, 1964 dropped the provision with effect from April 1, 1964. After the removal of the secrecy clause, incomes above certain limits like Rs.1 lakh were being published in newspapers for some years so that the public may provide information useful for investigation prompted by such publication. Disclosure of information is now permissible under Sec. 138 for purposes of not only enforcement of other laws but also to any person who makes an application to the Chief Commissioner or Commissioner in the prescribed form for any information relating to any assessee, whereupon the Chief Commissioner or Commissioner may share such information as is considered relevant in public interest with right to the government not to share any information relating to any notified class of assessees or transactions apparently to provide for secrecy relating to security of the country or voluntary disclosure schemes or such other matters requiring confidentiality. The Right to Information Act, 2005, provides a gateway for a number of requests now turning to a floodgate, as for example, for information under the Income-tax Act, including those of relatives of the former Chief Justice of India. Information relating to political opponents is routinely sought. It would be difficult to deny such information even under the present Sec. 138, if it is for public interest, “an unruly horse”, giving rise to possible controversies either for exercise or non-exercise of power or duty for disclosure. But such information under Sec. 138 would ordinarily be restricted to the amount of income returned under the income-tax law and wealth returned under the wealth tax law. There is no such restriction under Right to Information Act. A recent ruling by the Central Information Commission on an appeal by a son-in-law requiring information about his estranged father-in-law has directed information though the Income-tax Department had denied the same on the ground that it was “personal” information. The argument of the petitioner for information was that he required the information to defend himself against dowry related criminal case filed against him. The Commission overruled the Income-tax Department on the ground that income-tax returns of individuals do not enjoy absolute ban and that the information required may have relevance to the criminal case so that it should not be legitimate to deny such information. When granting such information, it was pointed out that a balance has to be struck between public interest and the right to privacy. At any rate, where a “non-disclosure would throttle the administration of justice”, there is no justification for denial. Time alone would tell how far the object of dropping Sec. 137 in 1964 on one hand and the interpretation placed on Right to Information Act, 2005, on the other would help the cause of justice and would not be used for scandalising and blackmailing without any fallout for public benefit. |
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