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Unraveling the Interplay Between Section 138 of the Income Tax Act and Section 22 of the RTI Act

CA Divyajeet Singh Sabharwal , Last updated: 25 January 2024  

The right to information and tax administration are two critical pillars of a functioning democracy. While the Right to Information Act (RTI Act) empowers citizens to access information held by public authorities, the Income Tax Act (IT Act) seeks to ensure confidentiality of taxpayer information while facilitating efficient tax collection. This article delves into the complex interplay between these two statutes, focusing on the potential conflict between Section 138 of the IT Act and Section 22 of the RTI Act, and its implications.

Section 138 of the IT Act

This section authorizes the income-tax authorities, under specific circumstances, to disclose information pertaining to an assessee (taxpayer) to certain specified authorities or bodies for purposes other than tax assessment. However, such disclosure is subject to the discretion of the Chief Commissioner or Commissioner, who must be satisfied that it is in the "public interest" to do so.

Unraveling the Interplay Between Section 138 of the Income Tax Act and Section 22 of the RTI Act

Section 22 of the RTI Act

This section exempts certain categories of information from disclosure under the RTI Act, including information related to income tax assessments and taxpayers' identity, unless disclosure is in the public interest or larger public good.

Potential Conflict

The apparent overlap between these sections raises a critical question: does Section 138 of the IT Act override Section 22 of the RTI Act when it comes to disclosing information concerning third parties related to an assessee?

Arguments for Overriding: Proponents of prioritizing Section 138 argue that

Specificity: Section 138 deals specifically with taxpayer information, while Section 22 is a broader exemption clause. Specificity should prevail in case of conflict, Parliamentary Intent: The Legislature, by providing a dedicated procedure for disclosure under Section 138, intended it to be the definitive rule for accessing taxpayer information, superseding the general exemption in Section 22 of the RTI Act, Tax Administration Efficiency: Disclosure under the RTI Act may hamper investigations and collection of taxes by compromising confidentiality and encouraging tax evasion.


Arguments against Overriding: Advocates for Section 22 emphasize that

  • Right to Information: The RTI Act promotes transparency and accountability, and restricting access to information based on Section 138 undermines this fundamental right, Public Interest Test: Even under Section 138, disclosure is permitted only if it is in the public interest. The burden of proving this lies with the income-tax authorities, ensuring that confidentiality is not misused., Judicial Interpretation: Courts have upheld the RTI Act's supremacy in certain cases, emphasizing the importance of transparency and access to information.
  • Judicial Precedents: The issue has been subject to ongoing litigation, with different courts reaching varying conclusions. Some judgments have prioritized Section 138, holding that specific provisions prevail over general exemptions. Others have emphasized the RTI Act's objective of transparency and ruled in favor of disclosure unless a compelling public interest justification exists for withholding information.

Implications: The ongoing debate has significant implications

  • Transparency and Accountability: Overriding Section 22 could limit public scrutiny of tax administration and potentially breed corruption. Conversely, unrestricted access to all information under the RTI Act might infringe upon individual privacy and hinder tax investigations.
  • Investor Confidence: A strong legal framework balancing transparency and confidentiality is crucial for attracting and retaining foreign investments. Uncertainty surrounding information access can deter investments.
  • Taxpayer Rights: Balancing the government's need for information with individuals' right to privacy is essential. Over-disclosure under the RTI Act can discourage investments and compromise financial privacy.
  • Moving Forward: To address this complex issue, several solutions have been proposed:
  • Harmonization of Legislation: Amending both the IT Act and the RTI Act to clearly define the scope of information disclosure related to third parties in tax matters.
  • Strengthening Public Interest Test: Establishing a more robust framework for determining what constitutes "public interest" under Section 138 and Section 22 to ensure informed and consistent decision-making.
  • Enhancing RTI Appeals Mechanism: Establishing an independent and effective appeals mechanism within the RTI Act to deal with grievances related to denial of information requests involving tax-related information.


Balancing the seemingly conflicting objectives of the IT Act and the RTI Act requires a nuanced understanding of the legal framework, judicial precedents, and potential implications. Moving forward, legislative clarity, a robust public interest test, and an efficient appeals system are crucial for ensuring transparency, accountability, and taxpayer privacy in the context of tax administration.

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Published by

CA Divyajeet Singh Sabharwal
(Accounts and Finance Analyst)
Category Income Tax   Report



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