Furnishing Assessee’s Information by the Income Tax Commissioner

One of my juniors asked whether the Income Tax Commissioner is required to furnish the information (i.e., the details/documents submitted by an assessee) on an application filed in the Form No. 46 (attached) under clause (b) of the sub-section (1) of section 138 of the Income Tax Act, 1961, reproduced below:

Disclosure of information respecting assessees.

138. (1)(b) ? Where a person makes an application to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in the prescribed form for any information relating to any assessee received or obtained by any income-tax authority in the performance of his functions under this Act, the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for and his decision in this behalf shall be final and shall not be called in question in any court of law.

“NO”, was the answer.

IT Commissioner may furnish the information?sought in Form No. 46 of the Income Tax Act only if (s)he considers the furnishing of the required information is in the larger public interest, otherwise not.

Therefore, IT Commissioner may reject any such application submitted u/s 138 (1) (b) of the Income Tax Act, 1961 stating that “furnishing of information is not in 'public interest'”, and may assign the reasons for rejecting the same, somewhat like, “the material sought for appears only to be for settlement of personal disputes between the parties and not being the matter of public interest”.

Generally, the IT Commissioner responds with a standard reply: "The details disclosed by a person in his income tax returns are "personal information" and the same is exempted from disclosure under clause (j) of Section 8(1) of the RTI Act. The decision of the IT Commissioner cannot?be challenged in a court of law.

As a decree-holder, our company desperately needed the asset details of the judgment debtor for filing an execution petition in the Delhi High Court.

In the case – ?Escorts Ltd vs Rakesh Kumar Gupta (decided on 24 November 2014), the Central Information Commission (“CIC”) directed the Public Information Officers/Commissioner of Income Tax (“PIO”) to provide the details of the following eight assesses:

1.?????? Dr. Naresh Trehan – petitioner in WPC # 85/2010 (for AYs 1998-99 to 2005-06)

2.?????? Mr. Rajan Nanda – petitioner in WPC # 207/2010 (for AYs 1998-99 to 2005-06)

3.?????? AAA Portfolio Pvt Ltd – petitioner in WPC # 251/2010 (for AYs 1998-99 to 2005-06)

4.?????? Big Apple Clothing Pvt Ltd – petitioner in WPC # 251/2010 (for AYs 1998-99 to 2005-06)

5.?????? Escorts Ltd – petitioner in WPC # 206/2010 (for AYs 1998-99 to 2005-06)

6.?????? Escorts Heart Institute & Research Centre Ltd. (Delhi) – petitioner in WPC # 202/2010 (for AYs 1998-99 to 2001-02)

7.?????? Escorts Heart Institute & Research Centre Chandigarh (Society) (for AYs 2001-02)

8.?????? Escorts Heart Institute & Research Centre Limited, Chandigarh (for AYs 2000-01 to 2005-06)

Since the information sought was third-party information, Dy CIT issued separate notices to the assessees. The assessees objected to the furnishing of such information. Thereafter, PIO considered the objections of the assessees and rejected the RTI application of CIC.

CIC contended that the information sought is in the public interest for recovering the tax evaded, recovering the properties misappropriated, and curbing corruption. The information sought is required as wrongdoings are detected. These activities by IT dept. are public in nature and the income tax records are public documents.

The assessees contended that ITRs and information provided by them is personal and exempt from disclosure under the IT Act and it was provided in confidence.

Delhi High Court (“DHC”) specifically dealt with all the contentions and also, the question whether the CIC has misdirected itself in concluding that disclosure of income tax returns and other information relating to assessment of income of the assessees was in public interest. The Court viewed that the CIC has misdirected itself in concluding that this was in larger public interest. Thus, the petitions were allowed and the impugned order by CIC was set aside by DHC.

Moreover, Notification No. 34, dated 25 Jul 2018, specifically?requires the Income Tax authorities to obtain prior permission before sharing any information received from a foreign jurisdiction, as the same may contain a reference to the confidentiality clause as per Article 26 of Model Convention and Chapter 7 of Exchange of Information Manual published by the FT&TR division of CBDT, which needs to be adhered to.