TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 376
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....titioner against the order passed by Judicial Magistrate Ist Class, Ludhiana, dated 18.09.2020, in COMA 7115/2020 dated 14.08.2020. Further, prayer has been made to set aside the Magistrate's order dated 18.09.2020 as well, whereby the application filed by the second respondent/Directorate of Enforcement (for short, 'E.D.') to inspect the documents attached with the complaint filed by the first respondent/Income Tax Department (for short, 'I.T. Department') has been allowed. 2.1. The other two petitions, CRM-M-37204-2021 and CRM-M- 37207-2021, have been filed under Section 482 Cr.P.C. by son of the petitioner in the first petition with identical prayers to quash the orders dated 02.09.2021 passed by Additional Sessions Judge, Ludhiana, in CRR No.11 dated 01.10.2020 and CRR No.10 dated 25.09.2020, dismissing the revision petitions filed by the petitioners, as also the orders dated 18.09.2020, whereby applications filed by the E.D. to inspect documents attached with the complaint filed by the I.T. Department have been allowed. 3. To notice the facts in brief from the first petition, CRM-M-37200- 2021, the I.T. Department filed a complaint dated 30.11.2016, before Chief Judicial....
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....the Indian Evidence Act, 1872 with regard to the print out of the above mentioned master sheets has been received from the Competent Indian Authority i.e. FT&TR Division of CBDT. Copies of letter dated 28.06.2011 of the Competent French Authority is annexed as Annexure-C-2, letter dated 14.07.2011 of FT&TR Division is appended as Annexure-C-3 copy of certificate dated 22.07.2011 regarding receipt of information by the DGIT(Inv.), Chandigarh is annexed as Annexure-C-4. The copy of master sheets received from competent Indian Authority i.e. FT&TR division of CBDT is appended as Annexure-C-5 and certificate dated 15.02.2016 u/s 65B of FT&TR Division of CBDT are hereto appended as Annexure-C-6. 3.1. On the basis of allegations aforementioned and the documents appended, the Magistrate found sufficient grounds for taking cognizance of the alleged offences against the petitioner punishable under Section 277 of the Income Tax Act and Sections 176, 177, 181, 186, 187, 193 and 199 IPC, and summoned him vide order dated 24.04.2017. The petitioner challenged the summoning order by filing a petition, CRR No.37 of 21.08.2017, which was allowed by Additional Sessions Judge, Ludhiana; the Magis....
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....the Agreement notified on 07.09.1994 and amended on 12.08.2009, which reads as under: 28. (1) The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of the Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention, insofar as the taxation thereunder is not contrary to the Convention, in particular, for the prevention of fraud or evasion of such taxes. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that Contracting State. However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Convention. Such persons or authorities shall use the information only for such purposes but may disclose the information in public court proceedings or in jud....
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....176, 177, 181, 186, 187, 193 and 199 of the IPC, wherein information in the form of master sheets originally received in Paris, France, by the competent authority of India/Foreign Tax and Tax Research Division of Central Board of Direct Taxes from the competent French authority, has been placed on record. It is to the effect that the petitioners are 'beneficiaries of foreign assets maintained and controlled through foreign business entities'. During pendency of proceedings before the Magistrate, the E.D. moved an application for inspection of the aforesaid information/documents on the ground that it was also seized of the subject matter of the complaint, and for the purpose of conducting investigation the documents were required to be examined. The application was allowed vide impugned order dated 18.09.2020, and revision petition against the same was dismissed vide impugned order dated 02.09.2021. While dismissing the revision petition, learned Additional Sessions Judge referred to Rule 2 of Part-C, Chapter 16 of the Punjab and Haryana High Court Rules and Orders, Volume 4, which allowed even a stranger to a civil or a criminal case to inspect record of pending case(s) for suffici....
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....er from any infirmity or error of law. 8. Further, learned counsel for the petitioners has assailed the impugned orders permitting inspection of the records on the ground that in Article 28 of the Convention under the "Agreement for Avoidance of Double Taxation with France" entered into between the Government of India and the French Republic, there is a bar on disclosing any information received by the contracting State and it is to be treated as secret under the domestic law. And as provided therein, it can only be disclosed to the persons or authorities involved in the assessment or collection of taxes or enforcement or prosecution thereof, etc. However, it remains undisputed that the information or documents placed on record before the Magistrate by the I.T. Department have been received by it in the French Republic at Paris, and its use as well as dissemination is regulated under the Agreement for Avoidance of Double Taxation, referred to above. The Supreme Court in Ram Jethmalani case (supra) had the occasion to examine one such Avoidance of Double Taxation Agreement entered into between the Government of India and Germany; Article 26 of the said agreement was pari materia ....
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....nk accounts, as well as with issues relating to the manner in which such monies were generated, which may include activities that are criminal in nature also. Comity of nations cannot be predicated upon clauses of secrecy that could hinder constitutional proceedings such as these, or criminal proceedings. 68. The claim of the Union of India is that the phrase "public court proceedings", in the last sentence in Article 26(1) of the double taxation agreement only relates to proceedings relating to tax matters. The Union of India claims that such an understanding comports with how it is understood internationally. In this regard the Union of India cites a few treatises. However, the Union of India did not provide any evidence that Germany specifically requested it to not reveal the details with respect to accounts in Liechtenstein even in the context of proceedings before this Court. 69. and 70. xxx xxx xxx 71. The last sentence of Article 26(1) of the Double Taxation Avoidance Agreement with Germany, "[T]hey may disclose this information in public court proceedings or in judicial decisions", is revelatory in this regard. It stands out as an additional aspec....
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....this process, particularly where Governments which come into being on account of a constitutive document, enter into treaties. The actions of Governments can only be lawful when exercised within the four corners of constitutional permissibility. No treaty can be entered into, or interpreted, such that constitutional fealty is derogated from. The redundancy, that the Union of India presses, with respect to the last sentence of Article 26(1) of the double taxation agreement with Germany, necessarily transgresses upon the boundaries erected by our Constitution. It cannot be permitted. 8.1. Apparently, the Court concluded that Article 26 of the Agreement, which is pari materia to Article 28 of the Agreement in the instant case, is no obstacle to disclosure of information. However, on account of the fact that investigation in those cases had not been concluded and right to privacy of an individual was integral part of the right to life, it was held that 'it would be inappropriate for this Court to order the disclosure of such names, even in the context of proceedings under clause (1) of Article 32', to the petitioners therein. At the same time, it has also been held, if after proper ....
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....nform the State, and consequently the State would have the obligation to investigate the same within the boundaries of constitutional permissibility. If the State fails to do so, the appropriate courts can always intervene. (Italics by this Court) 8.2. Finally, the Court issued a direction to the Union of India to disclose the names of individuals with respect to whose Bank accounts investigations have been concluded, either partially or wholly, and show cause notices issued and proceedings initiated. The Union of India was exempted from revealing the names of those individuals with respect of whom investigations/enquiries were in progress and no information or evidence or wrongdoing was available. 8.3. In the facts of the case at hand, information regarding the foreign assets concerning the petitioners has been placed on record in the form of documents before the Magistrate by the I.T. Department which has been sought by another government Department/E.D. for the purpose of investigation. It is not a case that the information has been demanded for public dissemination; rather, it is only for carrying out investigation against the petitioners. They have no right to object to ....