2025 (7) TMI 1775 - HC - Income Tax

Petition Rejected for Disclosure of Third-Party Tax Evasion Info Under Section 138(1)(b) IT Act

Nooty Vasishta Venkateswarlu Versus Union of India, The Principal Chief Commissioner of Income Tax, Principal Director of Income Tax (Inv.), Income Tax Officer (Hqrs) (Tech).

The HC dismissed the petition challenging the refusal to disclose third-party tax evasion information under s.138(1)(b) IT Act. The petitioner sought ... Seeking Third Party Information - Disclosure of information respecting assessees u/s 138 - seeking information u/s 138(1)(b) of the IT Act in respect of evasion of tax proceedings initiated at the behest of the petitioner against his father-in-law/Ex-wife - Rejection of an application u/s 138(1)(b) requesting for information by the office of the Principal Director of Income Tax (Investigation), Hyderabad, on the ground that the information sought for does not involve any public interest has been made the subject matter of challenge in the present writ petition. HELD THAT:- It is apparent that the petitioner is tryingto seek information u/s 138(1)(b) of the Act in respect of evasion of tax proceedings initiated at the behest of the petitioner against his father-in-law, to be used as an evidence in a proceeding under Section 498-A of IPC instituted by his ex-wife. The petitioner has already been furnished information under the Right to Information Act, 2005, by the CPIO of the Income Tax Department. Beyond that, further information as regards evasion of tax proceedings as against an individual by the petitioner and that too to be used as an evidence in a criminal trial cannot fall in the category of public interest. The impugned order also does not appear to suffer from lack of application of mind or proper reasoning. It is always open for the petitioner to take a defence of the information already supplied to him under the Right to Information Act, 2005, in the criminal proceedings. The disclosure of further information relating to a proceeding for evasion of tax against a third party should not be allowed under the category of public interest. Therefore, we do not find any merit in this writ petition. ISSUES: Whether information relating to tax evasion proceedings against a third party can be disclosed under Section 138(1)(b) of the Income Tax Act, 1961 on the ground of public interest.Whether the rejection of the application for information under Section 138(1)(b) of the Income Tax Act, 1961 was cryptic and lacked proper reasoning.Whether information obtained under the Right to Information Act, 2005 can be supplemented or expanded by invoking Section 138(1)(b) of the Income Tax Act, 1961 for use in criminal proceedings. RULINGS / HOLDINGS: The Court held that disclosure of further information relating to a proceeding for evasion of tax against a third party cannot fall within the category of 'public interest' under Section 138(1)(b) of the Income Tax Act, 1961, especially when the information is sought to be used as evidence in a criminal trial instituted by the petitioner's ex-wife.The impugned order rejecting the application under Section 138(1)(b) of the Act was not 'cryptic' and did not suffer from lack of application of mind or proper reasoning, as the competent officer examined the application on merits and found it not fit to be allowed.The petitioner is entitled to rely on the information already furnished under the Right to Information Act, 2005, and cannot claim additional information under Section 138(1)(b) of the Income Tax Act for the purpose of defending himself in criminal proceedings. RATIONALE: The Court applied the statutory framework of Section 138(1)(b) of the Income Tax Act, 1961, which permits disclosure of information only if it involves 'public interest.'The Court referenced the inclusion of the Office of the Director General of Investigation (Income Tax) in the Second Schedule to the Right to Information Act, 2005, which excludes certain information from disclosure, reinforcing the limited scope of disclosure under Section 138(1)(b).The Court relied on precedent from a coordinate Bench refusing disclosure of similar information in inter se disputes, likening the present dispute to a private matrimonial and criminal matter rather than a matter of public interest.No dissent or doctrinal shift was noted; the Court emphasized that disclosure of tax evasion proceedings against a third party for private litigation or criminal defense does not qualify as public interest under the Act.