1998 (2) TMI 81 - HC - Income Tax

Summary

Issues Involved:
1. Maintainability of the writ petition.
2. Locus Standi of the petitioners.
3. Legality of the impugned letter dated November 25, 1997.
4. Confidentiality and anonymity of the declarants under the Voluntary Disclosure of Income Scheme (VDIS).
5. Alleged public interest litigation.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The writ petition was filed under Article 226 of the Constitution by the Kanpur Income-tax Bar Association and a chartered accountant, challenging a clarification in a letter issued by the Central Board of Direct Taxes (CBDT) on November 25, 1997. The petitioners sought several reliefs, including quashing the letter, restraining the Commissioner of Income-tax from reopening certificates already granted, and extending the last date for submitting declarations under the VDIS. A preliminary objection was raised regarding the maintainability of the writ petition at the instance of the practitioners, leading to a detailed discussion on their locus standi.

2. Locus Standi of the Petitioners:
The court examined whether the petitioners, who are tax practitioners, had the locus standi to file the writ petition. The petitioners argued that they were acting in public interest to ensure the proper implementation of the VDIS and relied on the precedent set in S. P. Gupta v. President of India (AIR 1982 SC 149). The court noted that in S. P. Gupta's case, the petitioners had a vital interest in the independence of the judiciary, which was perceived as a public injury. However, in the present case, the petitioners were espousing the cause of their clients who had evaded taxes and sought to convert black money into white. The court concluded that the petitioners had no direct personal interest and were not acting in public interest, thus lacking locus standi.

3. Legality of the Impugned Letter Dated November 25, 1997:
The impugned letter required declarants to produce credible and satisfactory evidence about the year of acquisition of silver articles, utensils, gold or silver coins, watches, etc., and stated that a simple affidavit would not suffice. The petitioners contended that this placed an extra burden on the declarants and was contrary to an earlier circular dated October 3, 1997. The court observed that the instruction aimed to prevent misuse of the scheme by requiring satisfactory evidence of the period of acquisition, thus plugging a loophole in the scheme. The court found the instruction to be justified and not illegal.

4. Confidentiality and Anonymity of the Declarants under the VDIS:
The petitioners argued that the confidentiality and anonymity of the declarants would be breached if individual declarants were required to challenge the impugned communication. The court rejected this contention, stating that the obligation of secrecy was on the Revenue authorities, and individual declarants were not debarred from disclosing their declarations. The court also noted that it was not necessary to provide detailed information about the income declared or the assets representing that income to file a writ petition.

5. Alleged Public Interest Litigation:
The court examined whether the writ petition could be considered a public interest litigation (PIL). It referred to the criteria for a genuine PIL, including public injury arising from a breach of public duty or violation of constitutional provisions, the petitioner acting bona fide, and the purpose being to advance the cause of the community or disadvantaged groups. The court concluded that the petitioners were not acting in public interest but rather in the interest of a small group of affluent tax evaders. The court emphasized that the litigation contemplated in public interest should relate to a general public injury affecting the people at large, which was not the case here.

Conclusion:
The court dismissed the writ petition in limine, holding that the petitioners lacked locus standi and the petition did not qualify as a public interest litigation. The court also upheld the legality of the impugned letter and rejected the argument about the breach of confidentiality and anonymity of the declarants.