2024 (1) TMI 1041 - HC - Income Tax

IT Act Section 138 overrides RTI Act for tax information disclosure, PM CARES Fund protected

Delhi HC held that IT Act prevails over RTI Act regarding disclosure of assessee information. The court ruled that Section 138 of IT Act, being a special ... Right to Information (RTI) relating to assessee relating to income tax - supremacy of RTI or IT Act - information seeked regarding approval relating to PM CARES Fund was denied to the Respondent by the CPIO and the Appellate Authority on the ground that the information sought is exempted from disclosure u/s 8(1)(j) of the Right to Information Act, 2005 - as contented any information relating to any assessee relating to income tax can be sought for only in the manner prescribed u/s 138 of the Income Tax Act and not under the Right to Information Act, 2005 - also argument raised by the Petitioner is that the information sought for by the Respondent is exempted u/s 8(1)(j) of the RTI Act and in any event since the matter relates to PM CARES Fund, it could not have been disclosed without hearing the PM CARES Fund. HELD THAT:- A reading of both the Acts shows that there is an inconsistency between the provisions of the RTI Act and the IT Act. Therefore, the question which arises for consideration is which Act will prevail. Ordinarily, if there are two non-obstante clauses then the latter one prevails over the former. At the same time, the applicability and overriding effect of an Act over other statutes cannot be decided merely by when the concerned Act comes into force and it is for the Courts to discern and interpret as to which Act will prevail over the other. In the present case, in the opinion of this Court, the IT Act, which is a special Act governing all the provisions and laws relating to income tax and super-tax in the country will prevail over the RTI Act which is in the nature of a General Act. Section 138 (1)(b) and Section 138 (2) of the IT Act which lays down a specific procedure relating to disclosure of information relating to a third party under the IT Act would override Section 22 of the RTI Act. The information sought for by the Respondent herein is clearly covered by Section 138(1)(b) of the IT Act. The satisfaction of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is, therefore, necessary before such information can be divulged. That satisfaction cannot be abrogated to any other authority under a general Act for divulging the information sought for. See SHRI RAKESH KUMAR GUPTA VERSUS INCOME TAX APPELLATE TRIBUNAL (ITAT) [2007 (12) TMI 547 - CENTRAL INFORMATION COMMISSION] Thus Section 138(1)(b) of the IT Act which specifically states that information relating to an assessee can only be supplied subject to the satisfaction of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, would prevail over Section 22 of the RTI Act. The information, as sought for by the Respondent herein, has been sought from the CPIO of Income Tax Department and not from the PM CARES Fund. The Petitioner herein does not treat PM CARES Fund as an authority. Since the information sought for by the Respondent relates to a third party, PM CARES Fund ought to have been heard. Section 11 of the RTI Act prescribes that any information related to a third party can only be divulged after giving notice to the said third party. In view of the above, the CIC ought to have followed the procedure specified under Section 11 of the RTI Act before ordering for grant of information as sought for by the Respondent herein. Thus, this Court is of the view, that the CIC does not have the jurisdiction to direct furnishing of information, provided for in Section 138 of the IT Act. In any case, even if they had the jurisdiction, the failure to give PM CARES, notice of hearing, would in itself have vitiated the impugned. WP allowed. Issues Involved:1. Applicability of Section 138 of the Income Tax Act, 1961 vs. Right to Information Act, 2005.2. Exemption under Section 8(1)(j) of the RTI Act.3. Requirement of hearing the PM CARES Fund as a third party.Summary:1. Applicability of Section 138 of the Income Tax Act, 1961 vs. Right to Information Act, 2005:The petitioner, CPIO/Dy. Commissioner of Income Tax, challenged the CIC's order directing the disclosure of documents related to the PM CARES Fund under an RTI application. The petitioner argued that such information could only be sought under Section 138 of the Income Tax Act, which requires an application to the Principal Chief Commissioner or equivalent authority and their satisfaction that disclosure is in the public interest. The court agreed, stating that the IT Act, being a special law, overrides the general provisions of the RTI Act as per the principle of 'generalia specialibus non derogant.'2. Exemption under Section 8(1)(j) of the RTI Act:The petitioner contended that the information sought was personal and exempt under Section 8(1)(j) of the RTI Act, which protects personal information from disclosure unless public interest justifies it. The court noted that the CIC did not adequately adjudicate on the public interest aspect and whether the information was indeed personal. The court emphasized that the satisfaction of the IT authorities under Section 138(1)(b) of the IT Act is necessary before disclosing information, which the CIC failed to consider.3. Requirement of hearing the PM CARES Fund as a third party:The petitioner argued that the PM CARES Fund, being a third party, should have been given an opportunity to be heard as mandated by Section 11 of the RTI Act. The court agreed, stating that the CIC should have followed the procedure under Section 11 before ordering the disclosure of information. The court concluded that the CIC lacked jurisdiction to direct the disclosure of information protected under Section 138 of the IT Act without following the due process.Conclusion:The court allowed the writ petition, setting aside the CIC's order dated 27.04.2022, and emphasized the precedence of the IT Act over the RTI Act in matters of disclosing information related to income tax assessees. The failure to notify the PM CARES Fund also invalidated the CIC's order.