Ayushi Singhal
in Administrative Law
Asked October 20, 2014

Swiss bank account holders

  • 1 Answer

What is the law under which the new government has refused to disclose the names of Swiss bank account holders? Was it a valid step under the law?

Answer 1

Default avatar
Aditya Marwah
The new Modi Government has refused to disclose the names of the Swiss Bank Account Holders claiming that disclosure of such information is privileged under the Double Tax Avoidance Agreements (DTAA), which was entered into by India with Germany in 1995. The advantage of DTAA is that it overrides the general provisions of taxing statute of a particular country, in the form of lowering the taxes, getting exemption of income from taxes, so that an individual is not taxed twice both in his domestic country and the foreign country. As per Article 26 of the DTAA, competent authorities (such as courts and administrative bodies) can be provided the information subject to secret being maintained of the information obtained and the information can only be disclosed to persons or authorities involved the determination of taxes. This information can be disclosed in public court proceedings or in judicial decisions. The Modi Government had refused to declare the names on the ground that it would violate DTAA which was signed between India and Germany, however, DTAA is not about black incomes, hence data can be released to the public if the names are given to courts. If the Supreme Court feels that there is a need to investigate on black income cases, then it can disclose the information that it receives to the Special Investigation Team (SIT). Thus the argument of Arun Jaitley that it would violate the treaty, only holds true to the extent that the information can be disclosed to the public, only if an enquiry is pending against a certain individual. Until then however, the information can be given to the courts or other administrative bodies. The government has to withhold such information and cannot disclose it to anyone. Nevertheless, withholding of such information is only mandated while the investigation procedure is on. Once the investigation is over, and facts emerge that can stand independent of the hearsay allegations, information can be disclosed to the public. The rationale behind this is to avoid unnecessary attention to possible false accusations and to prevent parallel media trials. The Supreme Court has stated in the Black Money Menace case (as per a 2011 order) that a pre-prosecution disclosure of such names would amount to an infringement of right to privacy. For example, if the Swiss bank account details of a businessman carrying out a legally valid business is disclosed it would amount to disclosure of sensitive information relating to his business for no fault of his. For all practical purpose he could have been - complying with all laws related to the maintenance of such an account, but just because of a false accusation leveled against him his privacy would have to be compromised with. Therefore you see that if a disclosure of names were made, then this would violate the right of privacy of individuals, which is an integral part of the right to life as recognized under Article 21 of the Indian Constitution. Such information cannot be disclosed unless a wrongdoing is proved on the basis of an Income Tax complaint made against that person. Thus, I feel that non-disclosure of names is a valid step under law, keeping in the mind the Fundamental Rights infringement that it would cause if the names were to be disclosed. However at the same time, I also feel that this information can be disclosed to the Courts or other concerned Administrative Bodies, as the treaty itself provides so. References- Germany Comprehensive Agreement, Income Tax department, available at: http://www.incometaxindia.gov.in/Pages/international-taxation/dtaa.aspx, last accessed on 4th November, 2014. Black Money: DTAA signed in 1995 constraining government from disclosing names, says Arun Jaitley: The Economic Times, available at: http://articles.economictimes.indiatimes.com/2014-10-17/news/55148453_1_modi-government-upa-government-black-money, last accessed on 21st October, 2014. Black Money info cannot be disclosed at all: Centre, Hindustan Times, available at: http://www.hindustantimes.com/india-news/black-money-information-cannot-be-disclosed-to-all-centre-tells-supreme-court/article1-1276316.aspx, last accessed on 21st October, 2014.
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