ED Can Inspect Court Files, Documents Attached In Complaint Filed By Income Tax Dept: Punjab & Haryana High Court

The Punjab & Haryana High Court has said that Enforcement Directorate (ED) can inspect documents filed before the Court with complaint lodged by the Income Tax ( I.T.) Department.The complaint was filed by the I.T. Department against the petitioners under Section 277 of the Income Tax Act, read with the provisions of the IPC, wherein information in the form of master sheets originally received in Paris, France, by the authority of the Foreign Tax was placed on record. It was alleged 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 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 and the same was challenged in the present case.Justice Tribhuvan Dahiya said, “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 it by alluding to the Avoidance of Double Taxation Agreement.”The Court further added, “It is the Government of India which has entered into this Agreement with the French Republic, whereunder the information has been handed over to the I.T. Department. In case disclosure of information causes any violation of terms of the Agreement, including that of Article 28, it is for the Department to oppose it on that ground and not for the petitioners. And the former has no objection to sharing the information for investigation, nor can such an objection be raised on its behalf in the light of law laid down in Ram Jethmalani case ibid. holding, if a citizen or entity has any information of wrongdoing with respect to a Bank account, it must be shared with the State which is under obligation to investigate the same. Here, the information is being sought by an organ of the State/the E.D. itself for the purpose of investigation which cannot be taken exception to in view of the settled law.”Counsel for the petitioners argued that 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.After hearing the submissions, the Court rejected the grounds raised and noted that the judgment in State of Tamil Nadu and Others v. K. Shyam Sunder and others, [(2011) 8 SCC 737] relied upon by the petitioner lays down what cannot be done directly, can also not be done indirectly as that would be an evasion of law, is not applicable in the present case.There is no restriction on the E.D. to access the information/documents placed on record before the Magistrate by the I.T. Department for the purpose of investigation. Therefore, it cannot be said that the E.D. is trying to procure the documents by circumventing the Agreement in question, the Court added.In the light of above, the petition was dismissed and the E.D. was permitted to inspect the record of the complaints before the Magistrate and access the information/documents; however, the same shall not be disseminated publicly unless permitted in accordance with law.Mr. Gurmohan Singh Bedi, Advocate, Mr. Amandeep S. Talwar, Advocate, Mr. Pawandeep Singh, Advocate,Mr. Anand V. Khanna, Advocate, and Ms. Ambika Bedi, Advocate for the petitioner(s) in all casesMr. Zoheb Hossain, Special Counsel (through video conferencing) assisted by Mr. Lokesh Narang, Senior Panel Counsel and Mr. Vipul Joshi, Advocate for the ED.Title: Amrinder Singh & Ors v. IT Department & OrsClick here to read order

ED Can Inspect Court Files, Documents Attached In Complaint Filed By Income Tax Dept: Punjab & Haryana High Court

Aiman J. Chishti

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ED Can Inspect Court Files, Documents Attached In Complaint Filed By Income Tax Dept: Punjab & Haryana High Court

Aiman J. Chishti

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