The Government has been stoutly resisting attempts to get information about Indians citizens holding money in secret accounts in Switzerland and other tax havens. Even the Supreme Court has not been able to make the Government agree to a disclosure of such names. Day after day, the Supreme Court has been expressing shock at the phenomenal growth of black money in the polity.
Proliferation of black money has come to occupy centre stage after the eruption of the 2G scam involving an estimated loss of revenue of Rs l.75 lakh crore
A group of 14 enlightened citizens of India addressed an ‘Open letter' expressing alarm at the ‘governance deficit; in government, business and institutions. “Among several urgent steps needed,” said the group, “the most critical was to make the investigation agencies and law-enforcing bodies independent of the Executive”.
Sec 138 of the I-T Act
Once upon a time Ministry of Finance used to publish names of tax defaulters in newspapers. The practice was stopped after the defaulters raised a hue and cry. There was once a prohibition of disclosure in Section 137 of the Income-Tax Act 1961. This was removed with the repeal of that Section in 1964. Section 138 enables the Central Board of Direct Taxes or any other income-tax authority specified by it to furnish any information received in the performance of the functions of the Department as may, in the opinion of the Board or other income-tax authority, be necessary for the purpose of enabling the officer to perform his functions under that law.
A person may apply to the Chief Commissioner or Commissioner in the prescribed form for any information received by the Income-Tax Officer in the performance of his functions under the Act. The Department may furnish such information as asked for, if it is satisfied that it is in the public interest so to do. The use of the term ‘may' should be interpreted as ‘shall' instead, the Government is interpreting is as “may not”.
RTI Act
The Central Information Commission considered the matter in the Manoj Kumar Saini In re 2011 198 Taxman 282 case at some length. The case revolved round Sections 6 and 8 of the Right to Information Act. The applicant sought information pertaining to the income-tax return of his father-in-law. This was in connection with the criminal case against him pertaining to dowry-related issues. Section 6 clearly states that the applicant shall not be required to give any reason for requesting the information.
Any public information needs to be furnished upon receiving a request to that effect. The CIC referred to Section 138 of the I-T Act, 1961. It pointed out that the Commissioner may furnish copy of the return to a third party if public interest necessitated such disclosure.
No immunity is granted against disclosure of information. Protection of disclosure has to be ensured by balancing two competing aspects of public interest, i.e. when disclosure would cause injury or unwarranted invasion of the privacy and on the other hand, if the non-disclosure would throttle the administration of justice.
In S.P.Gupta vs. Union of India (1982) 2 SCR 365, a seven-judge Bench of the apex court held that the public interest in the administration of justice in a particular case overrides all other aspects of public interest and disclosure must be ordered in respect of documents in the custody of Income-Tax Department.
Public Interest
Long way back, in 1977 the Gujarat High Court pointed out that the ‘expression of public interest' must take its colour and content from the context in which it is used.
Tax evasion is not in public interest. If disclosure of tax return will help augment the predominant view that tax evasion must be curbed at any cost, then the Government is duty bound to disclose. The Court would not and should not lend its assistance to defeat public interest which requires a full-scale debate on persons found to be holding secret funds abroad.
We already know the names of captains of industry receiving huge dividends running into several crores of rupees free of tax.
We also know the names of industry leaders receiving salary of more than Rs 15 crore per year. The names of zero tax companies are also published periodically.
It is difficult to understand that all these information can be in the public domain, but not information relating to heinous crimes involving fiscal fraud. Every other day, if we scan the newspapers, we will find names of petty pick pockets arrested and taken to jail or some small time government servants jailed for receiving small illegal gratification.
Why a separate rule for black money holders?
(The author is a former Chief Commissioner of Income-Tax.)