Vdis Confidentiality Comes Under Threat

The confidentiality promised under the Voluntary Disclosure of Income scheme will be breached if the government proceeds with plans to use the information to expand the tax base. The revenue departments plan is contained in an internal circular issued by the Central Board of Direct Taxes to income tax commissioners on January 22.

The circular has directed income tax commissioners to store the packages containing the declarations in State Bank of India vaults, hired specifically for the purpose. But the packages are to be stored only after the commissioners have shortlisted declarants who have not been filing returns. The tax commissioners have been told to await instructions for issuing a personal account number (PAN) or general index registration (GIR) number to such declarants. The CBDT proposes to bring these declarants under the tax net.

 

The circular also directs the chief commissioners to seal only the packets containing the declaration forms. The copies of certificates issued and the declaration registers are to be retained in the personal custody of the chief commissioners, to be consulted if any reference or verification is required.

Similarly, the circular also states that the papers stored in the vault can be taken out, if required, after seeking clearances from member (investigation). Additionally, the commissioners have been directed to issue certificates in all pending cases, irrespective of whether they are usual or unusual. Investigations, if any, in these cases will be made at the assessment stage.

Tax consultants said such a move would violate the governments repeated promises that the declarations would be kept strictly confidential and the information would not be used to launch investigations.

The consultants added that the circular was issued by the CBDT in contempt of an Andhra Pradesh High Court order. The order was passed on December 29, 1997, two days before the closure of the scheme, in response to a petition challenging the validity of the CBDT circulars. The High Court struck down the 53-odd clarifications issued by the CBDT during the duration of the scheme on the grounds that the Finance Act does not empower the board to issue such clarifications.