Black money: Keep foreign info strictly secret, CBDT tells I-T

CBDT has issued fresh instructions to the taxman to ensure that information on individuals holding black money abroad is strictly kept secret as it stressed that any "careless" act could give an excuse to the data supplying country for not helping India in the future.

"In many countries, governments have given commitments to their citizens... that information will not be provided under the tax treaty if the recipient country has not complied with its obligations under the agreement to protect the confidentiality of information and using the information solely for collecting and enforcing taxes covered by the agreement.

"Further, in many countries... governments have recognised that the offshore financial centres have agreed to exchange information under tax treaties only if the information is treated as confidential and used for the purposes specified in the agreement through which it is exchanged. Any breach of these requirements may provide an excuse to them (foreign nations) not to provide information in future," CBDT told its officials in the latest instructions issued vis-a-vis cases of illegal funds stashed abroad.

The Central Board of Direct Taxes (CBDT) is the apex policy making body of the Income Tax department.

The instructions, accessed by PTI, added that "it is, therefore, essential that for continued assistance by our treaty partners, the information received should be kept confidential and should be used and disclosed as per the terms of agreement.

"The officers of the tax department should ensure that no inappropriate disclosure is made either intentionally or by accident or carelessness," it said.

There have been many instances in the past of the government citing these treaty riders while refusing to disclose the names of such individuals before their cases reached the prosecution stage.

The names of at least seven "Indian nationals" holding Swiss bank accounts were recently made public in Switzerland's Federal Gazette with regard to details sought about them by the Indian authorities.

CBDT has said that such information can be put in the public domain only in case of a court taking cognisance of the charge sheet filed by the taxman against any accused.

"Once a prosecution is launched in a regular criminal court based on information received through a treaty and the court takes cognisance... The information may become public in this manner and may be used by other law enforcement agencies dealing with corruption, money laundering, terrorist financing, among others," it said.

The level of secrecy, CBDT said, is to be kept so high that even the person or assessee under investigation should not know the full details of the processes followed by the department to nail him or her.

"The letter/email of the foreign Competent Authority should not be shared (with the assessees) although the contents of the letter/extracts may be shared. The information which is used against the taxpayer may be made part of the assessment order. However, only the information which is relevant to the taxpayer and which is actually used against him should be included as part of the assessment order.

"The letter of the Competent Authority, under no circumstance, should be made part of the assessment order by scanning and pasting in the order, although the relevant contents of the letter/extracts may be included," it said.

The information received by it on overseas black money and illegal funds cases through tax treaties like the Double Taxation Avoidance Agreement (DTAA), Tax Information Exchange Agreement (TIEA) or the Automatic Exchange of Information (AEoI) route, among others, shall be treated as secret in the "same manner" as the information processed under domestic tax laws of India, it added.

CBDT also laid down the Standard Operating Procedures (SOPs) to be followed while handling the physical documents by officials working on cases pertaining to Indians who have illegal funds or accounts abroad.