Cabinet secy, IB, NIA can access ITRS, tax info

THE MOVE WILL HELP THESE AGENCIES IN THEIR EFFORTS TO CURB TERRORISM AND CHECK DRUG TRAFFICKING

nNEWDELHI:THE Cabinet Secretariat, the Intelligence Bureau (IB), the Narcotics Control Bureau (NCB) and the National Investigation Agency (NIA) have been formally authorised to access income-tax returns (ITRS) and other tax-related information of individuals or firms, a move that will help these agencies in their efforts to curb terrorism and check drug trafficking, two government officials said.

A notification to this effect was issued by the Central Board of Direct Taxes (CBDT) on Tuesday, the officials said requesting anonymity. Section 138 of Income-tax Act, 1961 empowers CBDT to furnish information received or obtained by income tax authorities to any other enforcement authority, they added.

Himanshu Parekh, partner and head - corporate and international tax at consultancy firm KPMG in India said, “The intention behind allowing such a free flow of information would be to empower the other agencies to take requisite action against the alleged offenders of law under different statutes.”

This provision enables “automatic” exchange of information relating to income-tax assesses with any tax authority, the

Reserve Bank of India, and any other authority notified by the government, Naveen Wadhwa, a deputy general manager at Taxmann said. “The notification allows tax department to share information of a taxpayer which might be relevant for the notified enforcement agencies,” he added.

The officials cited above said sharing of information with enforcement authorities aims at greater national security. “While an honest taxpayer should not worry, incongruous information provided by unscrupulous elements to different authorities will now be caught,” one of the officials said.

“The move has made information exchange between the tax authority and other agencies formal and legally tenable in a court of law,” the second official added.

Explaining the legal implications of the move for income-tax assesses, SR Patnaik, partner and head-taxation at law firm Cyril Amarchand Mangaldas said, “The action taken by the tax authorities cannot be challenged by the taxpayer on the ground that the tax authorities did not have the power to use such evidence against him.”

Experts said taxpayers need to be very careful because discrepancies in information or documents provided by them could attract scrutiny by multiple agencies.

“Various agencies and government bodies as notified can receive information from income tax authorities on taxpayers which can further help them in their own governance under various laws,” said Archit Gupta, founder and CEO of financial technology platform Cleartax.