corporate law
A case initiated by Delhi-based chartered accountant R.K. Gupta led to the CIC's order on December 14, requiring the Income Tax (I-T) Department in Delhi to permit Gupta to inspect records and provide information pertaining to the tax details of Escorts Limited and Dr. Naresh Trehan. The commission mandated that this information be shared with Gupta by January 15.
As of now, the I-T department has neither shared the requested information with Gupta nor has the government issued any written guidelines for I-T offices nationwide regarding the CIC's order. Subsequently, both Escorts and Dr. Trehan have appealed to the Delhi High Court to contest the CIC's ruling.
Gupta has expressed his frustration, stating, "I haven't received any information from the I-T." He remains pessimistic about obtaining the details, referencing a similar request from over six months ago that still lacks a response from the I-T department.
The I-T department continues its longstanding procedure of seeking clearance from the relevant third party before disclosing tax information. A senior I-T official noted, "The department requests consent from the concerned third party, which is usually declined, thereby preventing us from sharing the information."
Notably, Section 138 (1)(b) of the Income Tax Act allows for the sharing of an assessee's information with others, provided that such disclosure serves the public interest. This provision has been effectively leveraged by various investigative agencies, including the police, Directorate of Revenue Intelligence, and Enforcement Directorate, to acquire tax information regarding individuals under investigation.
“Due to the investigative nature of our requests, we share this information with other agencies without needing permission from the concerned assessee,” elaborated the official.
Despite the implications of the CIC's order, the Central Board of Direct Taxes (CBDT) has not yet issued any directive to comply with it. Consequently, the authorities are unwilling to share information under the Right to Information Act without the third party's consent.
When approached for comments, Chief Commissioner of Income Tax, Mumbai, R.K. Singh confirmed that no government instruction has been provided concerning the CIC order. He reaffirmed the department's policy, stating, “We do not disclose information about third parties without their clearance.”
The complexities surrounding the acquisition of income tax information under the current legal framework highlight the challenges faced in balancing transparency and privacy.