Explained: Are details of income-tax return filings confidential?

Experts cited that disclosing an individual's income tax returns constitutes a violation of their fundamental right to privacy as recognized by the Indian Constitution

Are income-tax returns of individuals confidential? The matter has come up after Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (Sebi), and her husband, Dhaval Buch, on Friday said their income-tax details had been accessed fraudulently.

“Shockingly, our income-tax returns clearly have been obtained by adopting fraudulent means and illegally. This is a clear breach of not only our right to privacy (which is a fundamental right) but also a violation of the Income Tax Act,” they said in a statement.  

Experts say disclosing an individual’s income-tax returns is tantamount to violating the person’s fundamental right to privacy as recognised by the Constitution.

“According to Section 8(1)(j) of the Right to Information (RTI) Act, such disclosure is prohibited unless it is proven that the information serves a larger public interest that overrides the individual’s right to confidentiality. The Income Tax Act, 1961, further enforces this protection under Section 138, which restricts access to tax-related information except under specific circumstances defined by law,” said Sonam Chandwani, partner, KS Legal & Associates. Chandwani added the legal principle upheld in various cases affirmed without an overriding public interest, the forced disclosure of an individual’s financial data, even for public figures, breached the constitutional protection against intrusion into personal matters. 

“We are upright and honest professionals and have led our respective professional lives with transparency and dignity, earning an unblemished record ... We are confident that we will be able to demolish all such motivated allegations even in future, while reserving our right to take appropriate legal remedy as we may be advised,” the Buch couple added.

There are instances when such breaches have happened. In 2016, RTI activist Kanhaiya Lal Gidwani sought details of the income-tax returns of Narendra Modi for the years when he was chief minister of Gujarat. 
 

The request was denied by the public information officer (PIO) of the Income-Tax Department under Section 8(1)(j) of the RTI Act, which exempts personal information from disclosure unless it involves a larger public interest.

The department said an individual’s income-tax returns were personal information, and its disclosure could lead to an invasion of privacy. The applicant’s contention that public figures’ privacy should not count here due to their influence over public matters was not deemed sufficient to outweigh privacy rights in the RTI Act. The matter did not proceed further in courts, and the information remained undisclosed.
 

In 2017, in the National Herald case, where Sonia Gandhi and Rahul Gandhi were accused of wrongdoing, there were demands and public interest litigation seeking the disclosure of their income-tax returns to ascertain their financial deals. However, the courts did not entertain the request, consistently upholding the right to privacy.

In 2018, Subramanian Swamy wanted politicians’ income-tax returns to be disclosed. Swamy, a BJP member, has frequently called for such disclosure. His position is that transparency regarding financial deals of public servants is in the national interest. However, these demands were not entertained by courts or the Central Information Commission.