Answer to Question #228340 in Management for Peter Masih

Question

Explain in detail two (2) real-life cases where provisions of information has been
denied on grounds of the exemption stated in Right to Information Act, 2005. (10 Marks)

Answer 1

(1)Investigation into tax evasion can be said to be over or complete, only after the final adjudication about the tax liability had been made after the matter has gone through all the stages of appeals and revisions as well as a final decision about prosecuting or not prosecuting that person has been taken by an appropriate competent authority.

In the case of Shri Shanker Sharma and M/s. First Global Stock broking Pvt. Ltd. and others Vs. Director of Income Tax (Inv.)-II & CPIO, Deptt. of Income Tax, Mumbai (F. No. CIC/AT/A/2007/00007 dated 10.07.2007) the applicant had sought names and details of informer on the basis of whose information searches were conducted on Shanker Sharma and Devina Mehra by Deputy Commissioner of Income Tax (Investigation) on reasonable belief. Tax evasion is frequently In a complex and elaborate process. The evader is often not a single person, but is part of an elaborate network, in which criminal elements ― even mafia, are closely involved. The persons who supply information to the public authority about tax evaders are, no doubt, actuated by the lure of the rewards which come their way for successful identification of tax evasion. Yet, at the same time, such persons are also accepting grave risks to themselves and their families. If their names and identities are disclosed, they can very well incur the wrath of the persons who suffer financially on account of the action by the public authority, as well as of the criminal elements who may be behind the scene operators. Divulging the source of the public authority‟s information, on the basis of which such authority acts to recover the legitimate revenues of the State, would cripple the very functioning of this Department, and will have deleterious and long-lasting affect on its functioning as well as on the State‟s revenues. 

The CPIO has pointed out that this matter was raised before the High Court by the same party in the same matter and the Court had firmly sided with the Income Tax Department in holding that the sources of information and files containing the notings of the Income Tax Department “are not required to be disclosed and privilege claimed by the respondents in that regard is accepted.” The ground for the Court to arrive at such a decision was sound and based upon a deep appreciation of the functioning and the purpose of the public authority, as well as the mechinations of those who find themselves at the receiving end of law enforcement by such designated public authorities. Any tampering with the established system is fraught with unforeseen and potentially destructive consequences for the entire edifice of the public authority. 

The respondents‟ response is that this averment of the appellants is not correct. The term “investigation” in the case of Income Tax Department includes not only initial investigation but all subsequent actions which included all levels of appeals and final determination of the Income Tax liability based upon the initial investigation. Till that has been completed no investigation can be said to be complete in its true sense. He also urged that a decision as to whether or not to prosecute the person investigated against, is taken only after all the above-mentioned stages of investigation are completed. Any disclosure of the information connected with the initial investigation, at any stage prior to final conclusion of prosecution, if any, would be detrimental to the public authority‟s case. He cautioned against taking an overtly mechanical view about completion of investigation as urged by the appellants. He also added that in matters of Police actions, very often there is a symmetrical progression of investigation and prosecution, with clearly defined limits. This is not so in matters of the so-called white-collar-crimes, which Income Tax evasions mostly are. Actions here are not so well defined and are often running to and fro till the final picture emerges and a final decision is taken about prosecuting or not prosecuting a given person who may have been investigated against. holding that it would be a misnomer to hold that investigation in matters such as this, the moment the Investigating Officer submits his report to the competent authority spells the end of investigation. 

DECISION:

The CPIO also explained, at great length, as to how the Department creates a database of its informants and sources, and code-names them so that their identities can be a strictly guarded secret. This is not known even to officers within the public authority, except those who may be directly dealing with the matter. To disclose the nature of the information even after deleting from it the names of the specific sources of the informant, can potentially damage the entire system. I agree with this reasoning. In consideration of the above, the appeals are rejected. 

(2)Once it is established that a certain information requested by an applicant is related to a quasi-judicial proceedings, RTI Act cannot be invoked to access the information related to that proceeding.

In the case of Shri Vijay Kamble Vs Customs Department, Mumbai (F.No.CIC/AT/A/2008/01466 dated 23.03.2009), the appellant asked for copies of show cause notices and other documents relating to the proceedings by Directorate of Revenue Intelligence (DRI) and currently under adjudication by the Commissioner of Customs (Exports). CPIO and the Appellate Authority declined to disclose the information variously citing Sections 8(1)d, 8(1)(h) and Section 8(1)(j) of the RTI Act.In their comments filed before the Commission, respondents have reiterated their point that the subject matter of this RTI-query was regarding evidence in an ongoing investigation conducted by Commissioner of Customs (Exports). Disclosure of any information at this stage would hamper the current investigation. During the hearing, respondents submitted that any process of investigation needs to be protected from intrusive intervention of third-parties claiming to be do-gooders. Unless the investigation is allowed to be conducted in the letter and spirit of the law in this case the Customs Act and if unconnected persons are allowed to intervene in the proceeding through intrusive enquiries, it would be difficult to maintain the integrity of the investigative process, expose the investigating and the adjudicating officers to external influences and duress and prevent them from concentrating on the case on hand. They also pointed out during the hearing that the adjudicating process was a quasi-judicial proceeding and in terms of the full Bench decision of the Commission (Rakesh Kumar Gupta Vs. Income Tax Appellate Tribunal (ITAT); Appeal No.CIC/AT/A/2006/00586; Date of Decision: 18.09.2007), it is beyond the scope of the RTI Act. If intervention for disclosure of information germane to an ongoing adjudication process i allowed, it will lead to questions being asked about proceedings before judicial courts and even the superior Courts. This should go against the scheme of separation of powers under the Constitution of India. Certain key aspects of this particular appeal relating to the information are: (i) the information is relating to a current adjudication proceedings before the Commissioner exports; (ii) matter was investigated by the Directorate of Revenue Intelligence, where after it was transferred to the Commissioner (Exports) for further adjudication; (iii) the adjudication proceedings are presently going on; (iv) the information relates to twelve third-parties, seven of which have objected to its disclosure on the ground of these items of information being their commercial confidence besides being personal to them; (v) Commissioner Customs (Export) has issued show cause notices to all 12 parties as a prelude to conduct the adjudication and (vi) matter has been hanging fire since 1998. 

DECISION:

Both appellant and respondents have brought-forth multiple aspects of this case in the context of the provisions of the RTI Act. The principal factor, which needs to be addressed, nevertheless, is whether the proceedings before Commissioner of Customs admittedly a quasijudicial proceeding would admit of action under the RTI Act. It has been the decision of the Commission in Rakesh Kumar Gupta Vs. Income Tax Appellate Tribunal (ITAT); Appeal No.CIC/AT/A/2006/00586; Date of Decision: 18.09.2007 that once it is established that a certain information requested by an applicant is related to a quasi-judicial proceeding, RTI Act cannot be invoked to access the information related to that proceeding That full Bench decision is entirely applicable to the present case. In view of this, it will not be possible for me to allow disclosure of the requested information. Appeal disposed of with these directions.