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ULC 03

IN THE HON’BLE SUPREME COURT

OF

BRITUSSIA

WRIT PETITION NO: _____/2015

[UNDER ART. 32 OF THE CONSTITUTION OF INDIA]

--IN THE MATTER OF--

AMERSIA ASSOCIATION ……….…………PETITIONER

VERSUS

UNION OF BRITUSSIA ....……………RESPONDENT

XIX ALL INDIA MOOT COURT COMPETITION, 2015

MEMORANDUM ON BEHALF OF THE PETITIONER

DRAWN AND FILED BY THE COUNSEL FOR THE PETITIONER



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TABLE OF CONTENTS

TABLE OF CONTENTS………………………………………………………………...………....I LIST OF ABBREVIATIONS……………………………………………………………………..III INDEX OF AUTHORITIES……………………………………………………………………....III STATEMENT OF JURISDICTION……………………………………………………………….VII STATEMENT OF FACTS…………………………………………………………………...…VIII ISSUES OF CONSIDERATION………………………………………………………………..…IX

SUMMARY OF ARGUMENTS………………………………………………………………..…..X

WRITTEN SUBMISSIONS………………………………………………………………………..1

1. Whether Government of Britussia was violating Fundamental Rights of Citizens of

Amersia and PAO’s guaranteed under the Constitution?.......................................................1

1.1. That not providing the ‘opportunity of being heard’ before sharing the information is

violation of fundamental rights guaranteed under the

Constitution………………………………………………………………………………...……..1

1.2. That arbitrary disclosure of bank accounts with properly accounted funds violates the

right to privacy…………………………………………………………………………………...4

1.3. That arbitrary disclosure of bank accounts resulted in loss of personal liberty…………7

1.4. That arbitrary disclosure of bank accounts resulted in loss of business………………….9

1.5. Conclusion for the first issue…………………………………………………………….…...10

2. Whether Article 26 of the DTAA was liable to be struck down to the extent it was beyond

the power of the Government under Section 90 of the Income Tax Act of

Britussia?.................................................................................................................................11

2.1. That article 26(3) is in violation of Section 90(1)(c) of the Income tax act of

Britussia…………………………………………….……………………………………………11

2.2. That provision involving transfer of information relating to capital beyond the scope of

section 90(1)(c) of Income Tax Act of Britussia …………………….……………..………12

2.3. That the provisions of Article 26 provide uncanalized and uncontrolled power to the

competent authority…………………………………………………………………….………14

2.4. Conclusion for the second issue………………………………………………………………16



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3. Whether Government of Britussia was wrong in sharing further requests from

Government of Amersia consequent to the violation of secrecy clause under Article 26 of

the DTAA?...............................................................................................................................17

3.8. Conclusion for the Third Issue………………………………………………………………….19

4. Whether the government of Britussia was wrong in sharing the information of a Non-

Resident?.................................................................................................................................20

4.1.That Amersia-Britussia DTAA was binding on the residents of the contracting state

……………………………………………………………………………………………………....20

4.2.That the government of Britussia was not bound to share the information of the Non-

Residents………………………………………..………………………………………………….21

4.3.Conclusion for the fourth issue………….………..……………………………………………..22

PRAYER ……………………………….…………………………………………………….XII



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INDEX OF AUTHORITIES

LIST OF STATUTES/REGULATIONS/RULES

1. The Constitution of India, 1950.

2. Income Tax Act, 1961

3. International Covenant on Civil and Political Rights, 1966.

4. Universal Declaration of Human Rights, 1948.

5. Indo-Hungary DTAA, Notification No: GSR 197(E), dated 31/03/2005.

LIST OF ABBREVIATIONS AND ACRONYMS

AIR All India Reporter

A. P. Andhra Pradesh

Art. Article

& And

Anr. Another

Bom. Bombay

Del. Delhi

DTAA Double Taxation Avoidance Agreement

Ed. Edition

Govt. Government

HLR Harward Law Review.

Kan. Karnataka

Ltd. Limited

Mad. Madras

Ors. Others

¶ Paragraph

Sec. Section

SC Supreme Court



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SCC Supreme Court Cases

i.e. that is

v. versus

vol. Volume

BOOKS AND COMMENTARIES

1. D. D Basu, Shorter Constitution of India”, 13th Ed., Rep.(2006), Wadhwa and

Company, Nagpur.

2. Dr. J.J.R. Upadhyaya, Administrative Law, 7th

ed.(2009), Central Law Agency,

Allahabad.

3. Dr. Vinod K. Singhania & Dr. Kapil Singhania., ‘Taxmann’s Direct Taxes Law and

Practice’, 52nd Ed., (2014).

4. Sampat Jain “Public Interest Litigation”, 2nd

Ed.(2003), Deep and Deep Publications,

Delhi.

5. G.G. Singh, “Principles of Statutory Interpretation”, 12th Ed.,Rep. (2011), Lexis Nexis

Butterworths Wadhwa Nagpur.

6. C.K. Takwani “Lectures on Administrative Law” 5th Ed.(2002), Eastern Book Company,

Lucknow.

7. B.L. Wadhera. “Public Interest Litigation” 4th Ed. (2014), Universal Law Publishing Co.

Pvt. Ltd. Delhi.

DICTIONARIES

1. A. G. Bryan, ‘Black’s Law Dictionary’, 9th Ed., 2009, West Group.

2. Daniel Greenberg, ‘Strouds Judicial Dictionary of Words and Phrases’, 7th Ed. Sweet and

Maxwell Co.

3. P. Ramanatha., ‘Concise Law Dictionary’, 3rd Ed., Rep. 2006, Wadhwa, Nagpur.

ELECTRONIC MEDIUM

1. http://www.manupatra.com (browsed on 10/01/15, 18/01/15, 28/12/14, 08/12/14, 20/01/15)

2. http://www.jstor.com (browsed on 21/12/14)



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3. http://www.mca.gov.in (browsed on 22/12/14, 08/01/15, 18/01/15)

4. http://www.sebi.gov.in (browsed on 23/12/14, 10/01/15, 20/12/14)

5. http://www.lexusnexus.com/in/legal (browsed on 5/01/15, 8/01/15)

LIST OF CASES

1. Additional District Magistrate (Rev.) v. Sri Ram, (2000) 5 SCC 452…………………...11

2. Air India v. Nargesh Meerza, (1981) 4 SCC 335..............................................................15

3. Ajay Hasia v. Khalid Mujib Sehravardi, AIR 1981 SC 487 (¶ 16, 19);…………………..1

4. Bachan Singh v. State of Punjab, AIR 1982 SC 1325…………………………………1&2

5. Baksey, (1954) 347 M.D. 442…...………………………………………………...……..10

6. Basudeo Tiwary v Sido Kanhu University, (1998) 8 SCC 194: AIR 1998 SC 3261……..1

7. Bidhannagar (Salt Lake) Welfare Assn. v. Central Valuation Board, (2007) 6 SCC 668...3

8. Cadell Weaving Mill Co. vs. CIT, 249 ITR 265…………………………………………12

9. Central Inland Water Transport Corporation Ltd. v. Brojo Nath, AIR 1986 SC 1571........2

10. Chairman, Railway Board v. Chandrima Das, AIR 2000 SC 988;…………………….….9

11. CIT vs. D.P. Sandu Bros. Chember (P) Ltd., 273 ITR 1………………………………...12

12. D. K. Yadav v J. M. A. Industries, (1993) 3 SCC 258………………………….………..9

13. D.T.C. v. Mazdoor Union D.T.C., AIR 1991 SC 101…………………………………1&2

14. David John Hopkins v. Union of India & Ors., AIR 1997 Mad 366…………..……….....9

15. Delhi Transport Undertaking v. B.B.L. Hajelay, AIR 1972 SC 2452...............................11

16. Devi Das Gopal Krishnan & Ors v. State of Punjab & Ors., 1967 SCR (3) 557.............14

17. District Registrar & Collector, Hyderabad v. Canara Bank (2005) 1SCC 496 ...………...1

18. Dolly Chandra v. Chairman Jee, (2005) 9 SCC 779…………………………………...…2

19. Francis C. Mullin v. Union Territory of Delhi, Administrator, AIR 1981 SC 746........8&9

20. Haryana Development Authority v. Dropadi Devi, (2005) 9 SCC 514.…………………..2

21. Hindustan Petroleum Corporation Ltd. v. ADIT, (2010) 130 TTJ 518 (Mum.)………....21

22. Indravadan H. Shah v. State of Gujrat, AIR 1986 SC 1035.………………………..…….1

23. Javed v. State of Haryana, AIR 2003 SC 3057…………………………………………....2

24. Kadra Pahadiya v. State of Bihar, AIR 1982 SC 1167……………………………………8

http://www.lexusnexus.com/in/legal



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25. Kaushal P.N. v U.O.I., AIR 1978 SC 1457(paras 60-62).……………………………….16

26. Kehar Singh v. UOI, (1989) 1 SCC 204…………………………………………….…….8

27. Kharak Singh v State of Uttar Pradesh, AIR 1963 SC 1295…………………………..4&7

28. M.P. Electricity Board, Jabalpur v. Harsh Wood Products, (1996) 4 SCC 522……….….1

29. Mahabir Auto Store v. Indian Oil Corporation 1990 SCR (1) 818……………………….2

30. Makkhan Singh Tarsikka v. State of Punjab, AIR 1952 SC 27…………………………...8

31. Maneka Gandhi v. UOI, (1978) 1 SCC 248……………………………………...……7&8

32. Municipal Committee, Patiala v. Model Town Residents Assn., AIR 2007 SC 2844.…15

33. Municipal Corporation of Greater Bombay v. Nagpal Mills & Anr. ……………………12

34. N.C.C.B. v. Ajay Kumar, AIR 1994 SC 39 (¶ 5)…………………………………...…….2

35. Narendrajit Singh Sahni v. U.O.I…………………………………………………………8

36. Olga Tellis and others v. Bombay Municipal Corporation & Ors, AIR 1986 SC 180........9

37. People’s Union for Civil Liberties v. Union of India, AIR 1997 SC 568;………………..4

38. Pradeep Jain v UOI, AIR 1984 SC 1420 (¶ 10, 13).………………………………………1

39. R. D. Shetty v Airport Authority, AIR 1979 SC 1628; (¶ 10, 21).…….……………....1&2

40. R. Rajagopal v. State of T.N., (1994) 6 SCC 632………………………………………...4

41. Ram Jethmalani & Ors. v. Union of India & Ors. 2011 8 SCC 1…………………………6

42. Ramji Lal v. State of U.P., AIR 1957 SC 620………………………………………….....2

43. Sitaram Vishambhar Dayal v. State Of U.P., AIR 1972 SC 116…….…………………..16

44. State of W.B. v. Anwar Ali Sarkar, AIR 1952 SC 75……………………………………15

45. Sudhir Chandra v. Tata Iron & Steel Co. Ltd. AIR 1984 SC 1064,1071………………..15

46. Suraj Mall Mohta& Co. v. A.V. Visvanathasastri AIR 1954 SC 545………..…………15

47. Suresh Chandra Sharma v. Chairman, AIR 2005 SC 2021.................................................2

48. Union of India & Anr. v. Azadi Bachao Andolan & Anr., AIR 2004 SC 1107................18

49. Vasantlal Maganbhai Sanjanwala v. State of Bombay & Ors., AIR 1961 SC 4...............14

50. VISPL v. Union of India and Ors. Bombay High Court WP/871/2014…………..……..12

51. Yasin v. Town Area Committee, AIR 1952 SC 115....................................................13&1

52. Avinder Singh v. State of Punjab, AIR 1979 SC 321…………………………………………………….16



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STATEMENT OF JURISDICTION

It is most humbly submitted that the Petitioner has approached this Hon’ble Supreme Court

under Article 321 of the Constitution of Britussia for the violation of Fundamental Rights

guaranteed under the Constitution of Britussia by filing a Public Interest Litigation.

The petitioner most humbly and respectfully submits before the jurisdiction of the present court

and accepts that it has the power and authority to preside over the present case.

1 Article 32 in The Constitution Of India, 1950-

32. Remedies for enforcement of rights conferred by this Part-

(1) The right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by

this Part is guaranteed.

(2) The Supreme Court shall have power to issue directions or orders or writs, including writs in the nature of habeas

corpus, mandamus, prohibition, quo warranto and certiorari, whichever may be appropriate, for the enforcement of

any of the rights conferred by this Part.

(3) Without prejudice to the powers conferred on the Supreme Court by clause ( 1 ) and ( 2 ), Parliament may by law

empower any other court to exercise within the local limits of its jurisdiction all or any of the powers exercisable by

the Supreme Court under clause ( 2 ).

(4) The right guaranteed by this article shall not be suspended except as otherwise provided for by this Constitution.



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STATEMENT OF FACTS

FACTUAL BACKGROUND

Amersia and Britussia are two neighboring developing countries. Both the countries were,

however, plagued with the problem of high taxes, leakages in tax collections and in

generation of unaccounted monies by a few, leading to low standard of living of majority of

its citizens.

The Government of Britussia negotiated and entered into Tax Avoidance

Conventions/Agreements (popularly referred to double taxation avoidance agreements)

containing, inter alia, specific clauses for Exchange of information with many Countries

including Amersia. The Amersia- Britussia Double Taxation Avoidance Agreement (DTAA

in short) was also notified in January 2014.

The Government of Amersia, received many Dossiers containing information under the

DTAA from the Government of Britussia. It started selectively leaking information of bank

accounts held by its citizens/PAOs and their business entities in Britussia to the Press. Some

ministers in the Government of Amersia publicly announced the names of their political and

personal opponents whose names were listed in the Dossier. No investigation or other

proceedings have been initiated against such persons till date.

Television Channels in Amersia ran continuous media trials of the persons whose names

were selectively or vindictively disclosed and created negative publicity for such individuals

and their businesses.

PROCEDURURAL BACKGROUND

The members of Amersia Association (Association in Short), an association formed for

protecting the social, cultural, financial and other interests of Citizens of Amersia and PAOs

in Britussia were alarmed by the turn of events in respect of the two non-members. With

respect to the issue the association reached the Prime Minister of Britussia,who refused to

help them for the reason that any such move will result in it losing information sources in its

mission to recover unaccounted money.

Having left with no choice, the Amersia Association filed a Public Interest Litigation under

Article 32 of the Constitution before the Supreme Court of Britussia seeking various relief.



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ISSUES FOR CONSIDERATION

1. WHETHER GOVERNMENT OF BRITUSSIA WAS VIOLATING FUNDAMENTAL RIGHTS OF

CITIZENS OF AMERSIA AND PERSONS OF AMERSIAN ORIGIN GUARANTEED UNDER THE

CONSTITUTION?

2. WHETHER ARTICLE 26 OF THE DTAA WAS LIABLE TO BE STRUCK DOWN TO THE EXTENT IT-

WAS BEYOND THE POWER OF THE GOVERNMENT UNDER SECTION 90 OF THE INCOME TAX

ACT OF BRITUSSIA?

3. WHETHER THE GOVERNMENT OF BRITUSSIA WAS WRONG IN SHARING FURTHER

INFORMATION CONSEQUENT TO THE VIOLATION OF THE SECRECY CLAUSE UNDER ARTICLE

26 OF THE DTAA?

4. WHETHER THE GOVERNMENT OF BRITUSSIA WAS WRONG IN SHARING THE INFORMATION OF

A NON – RESIDENT?



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SUMMARY OF ARGUMENTS

ISSUE 1: WHETHER GOVERNMENT OF BRITUSSIA WAS VIOLATING FUNDAMENTAL RIGHTS OF

CITIZENS OF AMERSIA AND PERSONS OF AMERSIAN ORIGIN GUARANTEED UNDER THE

CONSTITUTION?

It is submitted that providing an opportunity of being heard enables the suspected person to have

an opportunity to remove any kind of mistake, misapprehension or misunderstanding, if any, it

also enables him to prepare his defense. The suspected persons whose information is so collected

and shared must be kept informed of the same in accordance of the principle of natural justice

the opportunity of being heard. The procedure which has been established by Britussia for

sharing of information Amersia is unreasonable, arbitrary, whimsical and fanciful as they do not

contain any provision for checking the credibility of the information to be shared, which is a

typical instance of abuse of power and departure from the procedure established by law thus

violative of right to privacy enshrined under Article 21. In the instant case, the Amersian citizens

and PAOs having bank accounts in Britussia lost their business/ livelihood due to protests and

violence against them due to the arbitrary sharing of information by the Government of Britussia

without checking the credibility of the same. In the light of the aforementioned contentions it is

firmly established that the Government of Britussia violated various Fundamental Rights

guaranteed under the Constitution of Britussia to citizens of Amersia and PAOs by arbitrarily

sharing their confidential information with the Government of Amersia.

ISSUE 2: WHETHER ARTICLE 26 OF THE DTAA WAS LIABLE TO BE STRUCK DOWN TO THE EXTENT

IT- WAS BEYOND THE POWER OF THE GOVERNMENT UNDER SECTION 90 OF THE INCOME TAX ACT

OF BRITUSSIA?

The provisions of the DTAA for the exchange of information was in particular for the prevention

of fraud, whereas, the parent or enabling act provides for transfer of information for prevention

of evasion or avoidance of Income Tax provided under the Act. Thus, the rule making authority



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in this perspective travels beyond the scope of the enabling act, hence liable to be declared ultra

vires. It is most humbly submitted before the kind consideration of this Hon’ble Court that the

provisions relating to transfer of information involving capital goes beyond the scope of Section

90 (1)(c). It is a settled principle that income does not include capital under the meaning of

“income” under Section 2(24). . Thus transfer of information relating to capital or total capital

would be beyond the scope of the parent or enabling act as it is a delegated piece of legislation

which is in excess of the powers conferred by the parent act. Hence the Government of Britussia

was wrong in sharing the information beyond the scope of Art. 26. The provisions of Article 26

provide uncanalized and uncontrolled power to the competent authority due to the fact that the

process of exchange of information is left to the discretion of the competent authority. Such a

provision provides with the executive uncanalized and uncontrolled power to act on their own

accord in absence of any guidelines framed by the legislature.

ISSUE 3: WHETHER THE GOVERNMENT OF BRITUSSIA WAS WRONG IN SHARING FURTHER

INFORMATION CONSEQUENT TO THE VIOLATION OF THE SECRECY CLAUSE UNDER ARTICLE 26 OF

THE DTAA?

It is submitted that article 26(2) of the Convention specifically mentions that information

received shall be treated as a secret and it shall be disclosed only to persons or authorizes

including courts or administrative bodies the television channels in Amersia ran continuous

media trials of the persons whose names were selectively or vindictively disclosed and created

negative publicity for such individuals and their businesses. There was hue and cry against such

persons. There was also loss of business, property and life. Also political expediency cannot be a

ground for not fulfilling the constitutional obligations inherent in the Constitution of India and

reflected in section 90 of the Income Tax Act. The article confers power to lay down a law which

is not contemplated under the Act on the ground of political expediency, which cannot but be

ultra vires



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ISSUE 4: WHETHER THE GOVERNMENT OF BRITUSSIA WAS WRONG IN SHARING THE INFORMATION

OF A NON – RESIDENT?

It is humbly submitted before this Hon’ble Court that, Article 1 of the DTAA sets the personal

scope of Agreement between the two Contracting States, i.e., Britussia and Amersia, according

to which the convention shall be binding on the residents of one or both of the Contracting States

only. Hence, Article 26 which provides for exchange of information between the contracting

states, for purposes stated under Article 26(1), can’t be made applicable to the non – residents

and consequently the information of non – residents cannot be exchanged under DTAA, and for

the same Government of Britussia is not bound. Information requested by the Amersian

Government was merely a device to satisfy its tussle with political and personal opponents and it

only requested the information by the way of “fishing expeditions” and as such there was no

foreseeable relevance of the information requested for the administration and enforcement of

Tax Law thus it was not obligatory on the part of the Government of Britussia to entertain such

requests and share their information.



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WRITTEN SUBMISSIONS

1. WHETHER GOVERNMENT OF BRITUSSIA WAS VIOLATING FUNDAMENTAL RIGHTS OF

CITIZENS OF AMERSIA AND PAOS2 GUARANTEED UNDER THE CONSTITUTION?

1.1. THAT, NOT PROVIDING THE “OPPORTUNITY OF BEING HEARD” BEFORE SHARING THE

INFORMATION IS VIOLATIVE OF FUNDAMENTAL RIGHTS GUARANTEED UNDER THE CONSTITUTION.

1.1.1. It humbly submitted that, the right of audi alteram partem is a valuable right recognized

under the constitution of Britussia, wherein it is held that, the principle of the maxim

which mandates that no one should be condemned unheard, is a part of the rule of

natural justice.3 The audi alteram partem facet of natural justice is also a requirement of

Art. 14, for natural justice is the antithesis of arbitrariness,4 and Art. 14

5 strikes at

arbitrariness of State action in any form,6 as it permeate the entire fabric of Rule of

Law.7

1.1.2. It is very pertinent here to take into account the case of Mahabir Auto Store v. Indian Oil

Corporation,8 where in the Apex court has held that,

“Every action of the State executive authority must be subject to rule of law

and must be informed by reason and the same can be impeached on the ground that

the decision is arbitrary or violative of Article 14. So whatever be the activity of

the public authority, it should meet the test of Article 14 of the Constitution.”

2 Persons of Amersian Origin.

3 M.P. Electricity Board, Jabalpur v. Harsh Wood Products, (1996) 4 SCC 522 : AIR 1996 SC 2258.

4 D.T.C. v Mazdoor Union D.T.C., A.I.R. 1991 SC 101; Basudeo Tiwary v Sido Kanhu University, (1998) 8 SCC

194: AIR 1998 SC 3261. 5 Article 14 of the Constitution of Britussia – Equality Before Law

6 Ajay Hasia v. Khalid Mujib Sehravardi, AIR 1981 SC 487 (¶ 16, 19); Pradeep Jain v UOI, AIR 1984 SC 1420 (¶

10, 13); Indravadan H. Shah v. State of Gujrat, AIR 1986 SC 1035; Ramana Dayaram Shetty v. I.A.A.I., A.I.R.

1979 SC 1628 (¶ 10, 21); D.T.C. v. Mazdoor Union D.T.C., AIR 1991 SC 101. 7 Bachan Singh v. State of Punjab, AIR 1982 SC 1325.

8 1990 SCR (1) 818.




Hence, this requirement of natural justice is applicable not only to judicial9 or quasi-

judicial orders but also to administrative orders affecting prejudicially the party in

question,10

and, any action imposing any restriction on the opportunity of hearing was

wholly arbitrary, unreasonable and against public policy, and thus, violative of Art. 14 of

the Constitution.11

1.1.3. It is submitted that the term reasonableness is very significant to determine the

synchronization of the restriction imposed with the entire fabric of Fundamental Rights.12

It is further submitted that a restriction is unreasonable if it takes away within its ambit

activities which constitute a legitimate exercise of fundamental rights guaranteed by

the Constitution.13

Thus, in the case at hand, the administrative order of sharing of

information under Double Taxation Avoidance Agreement (hereinafter as “DTAA”),

restricting the opportunity of hearing is unreasonable as it is an arbitrary abridgement of

fundamental rights guaranteed under Art.14 of the Constitution.

1.1.4. The counsel further submits that, Art. 14 strikes at arbitrariness because it negates

equality14

and permeates the entire fabric of Rule of Law.15

Therefore, every action of

the State must be guided by reason for public good and not by whim, caprice, and

abuse of power.16

However, in the instant case, the denial of the opportunity of being

heard for unknown and unguided reasons shall amount to abuse of power and should be

regarded as arbitrary use of power. Thus, the whimsical decision of the authorities of not

providing the opportunity of being heard before sharing the information, which abridges

9 N.C.C.B. v. Ajay Kumar, AIR 1994 SC 39 (¶ 5).

10 D.T.C. v. Mazdoor Union D.T.C., AIR 1991 SC 101 (¶ 199, 244, 251, 262, 264, 267)

11 Central Inland Water Transport Corporation Ltd. v. Brojo Nath, AIR 1986 SC 1571;

12 Javed v. State of Haryana, AIR 2003 SC 3057.

13 Ramji Lal v. State of U.P., AIR 1957 SC 620.

14 R. D. Shetty v Airport Authority, AIR 1979 SC 1628; Suresh Chandra Sharma v. Chairman, AIR 2005 SC

2021. 15

Bachan Singh v. State of Punjab, AIR 1982 SC 1325. 16

Haryana Development Authority v. Dropadi Devi, (2005) 9 SCC 514; Dolly Chandra v. Chairman Jee,

(2005) 9 SCC 779.




the fundamental right of a person to be heard shall be regarded as arbitrary and in

violation of Art. 14 of the Constitution.

1.1.5. The counsel humbly acknowledges the fact that, the exchange of information between the

contracting states is to give effect to the DTAA between the two states which aims at the

avoidance of double taxation and prevention of fiscal evasion, which is undoubtedly pro

bono. However, even a statute which provides for civil or evil consequences must

confirm to the test of reasonableness, fairness and non-arbitrariness.17

1.1.6. In the case of Bidhannagar (Salt Lake) Welfare Assn. v. Central Valuation Board,18

the

impugned provisions were held to be per se unreasonable, arbitrary and violated the

principles of natural justice and there were no guidelines in the impugned Act and hence,

the court declared the impugned Act unconstitutional, it being violative of Art. 14 of the

constitution. In the instant case, the impugned provisions for exchange of information

contained under Art. 26 of DTAA lay down no such guidelines for checking the validity

and authenticity of information to be shared. No such criteria have been laid for the

investigation of the credibility of the information, and, for providing the opportunity of

being heard, before the same is being exchanged with the other contracting state and

hence, the same is an arbitrary use of delegated power by the authorities and is violative

of the principles of natural justice and Art. 14 of the Constitution.

1.1.7. The counsel humbly submits that, providing an opportunity of being heard serves two

purposes, firstly it enables the suspected person to have an opportunity to remove any

kind of mistake, misapprehension or misunderstanding, if any, in the mind of the

authority who is authorized to share such information and secondly, it also enables him to

prepare his defense. Hence, the suspected persons whose information is so collected and

shared must be kept informed of the same. Thus, in accordance of the principle of natural

justice the opportunity of being heard must be provided to the person whose information

is being shared under the DTAA.

17

(2007) 6 SCC 668 (¶ 28, 37 &38). 18

Ibid.




1.2. THAT, ARBITRARY DISCLOSURE OF BANK ACCOUNTS WITH PROPERLY ACCOUNTED FUNDS

VIOLATES THE RIGHT TO PRIVACY.

1.2.1. It is submitted that, Right to Privacy is an integral part of right to life guaranteed under

Art. 2119

of the Constitution.20

Once the facts in a given case constitute a right to

privacy, Article 21 is attracted. The said right cannot be curtailed except according to

procedure established by law.21

Right to Privacy is also a fundamental human right

recognized in the UN Declaration of Human Rights, 1948,22

the International Covenant

on Civil and Political Rights, 197623

and in many other international and regional treaties.

Privacy underpins human dignity and other key values such as freedom of association

and freedom of speech. It has become one of the most important human rights issues of

the modern age. Privacy is the most cherished of freedoms in a democracy, and he was

concerned that it should be reflected in the Constitution.24

1.2.2. It is further submitted that, in India the question of right to privacy was first raised in

Kharak Singh's case.25

In this case Subba Rao, J. had observed that:

"the right to personal liberty takes in not only a right to be free from

restrictions placed on his movements, but also free from encroachments on his

private life. It is true our Constitution does not expressly declare a right to

privacy as a fundamental right, but the said right is an essential ingredient of

personal liberty."

1.2.3. Privacy is a basic human right and the reasonable expectation of every person.26

In the

instant case, the right to privacy of Amersian citizens and PAOs having bank accounts in

19

Article 21 of the Constitution of India – Protection of life and Personal Liberty. 20

People’s Union for Civil Liberties v. Union of India, AIR 1997 SC 568; R. Rajagopal v. State of T.N., (1994) 6

SCC 632. 21

Ibid. 22

Article 12 of UDHR. 23

Article 17 of ICCPR. 24

W. Samuel and L. Brandeis, The right to privacy, 4 HLR., p. 193 – 200 (1890). 25

Kharak Singh v State of Uttar Pradesh, AIR 1963 SC 1295.




Britussia has been violated by the Government of Britussia who shared their information

of bank accounts with the Government of Amersia without seeking their permission to do

so. Such an act is a grave infringement upon privacy of the Amersian citizens and PAOs

having bank accounts in Britussia.

1.2.4. The Supreme Court in R. Rajagopal v. State of Tamil Nadu 27

has held that right to

privacy is implicit in the right to life and liberty guaranteed to the citizens by article 21. It

is a "right to be let alone". It is a right of the individual to be protected against intrusion

into his personal life or affairs, or those of his family, by direct physical means or by

publication of information.28

1.2.5. ‘Personal data’ includes any information which is about a living, identifiable individual

and relates to the individual29

. Financial records of an individual would therefore

classify as personal data and is subject to protection under an individual’s right to

privacy. ‘Arbitrary interference’ in any individual’s privacy and their personal

information constitutes an infringement of his fundamental human right to privacy.30

Interference is arbitrary when it does not pass the test of reasonableness.31

1.2.6. It is hereby submitted that, it is now a well established fact that bank account details are

an individual's private details which should not be shared and secrecy regarding the same

should be maintained. But, in the instant case, the Government of Britussia without

seeking permission from the account holders and conducting further investigation to

check the credibility of the information shared these details with the Government of

26

Australian Privacy Charter Group, Law School, University of New South Wales, The Australian Privacy

Charter(1994). 27

See Supra 20. 28

Report of the Committee on Privacy and Related Matters, Chairman David Calcutt QC, 1990, Cmnd. 1102,

London: HMSO, page 7 29

OECD, Protection of Privacy; Council of Europe, Convention for the Protection of Individuals with regard to

Automatic Processing of Personal Data, ETS No. 108, (Jan 28, 1981) 30

See Supra 22, 23; J.S. Mill, Principles of Political Economy, p. 306 (1970); 31

See Supra 14.




Amersia, thus, violating right to privacy which is a part of right to life and personal

liberty guaranteed under Art. 21 of the Constitution.

1.2.7. In a much celebrated case of Ram Jethmalani & Ors. v. Union of India & Ors.32

, it was

observed by the Hon’ble Supreme Court that:

“We understand and appreciate the fact that the situation with respect to

unaccounted monies is extremely grave. Nevertheless, as constitutional

adjudicators we always have to be mindful of preserving the sanctity of

constitutional values, and hasty steps that derogate from fundamental rights,

whether urged by governments or private citizens, howsoever well meaning they

may be, have to be necessarily very carefully scrutinized. The solution for the

problem of abrogation of one zone of constitutional values cannot be the creation of

another zone of abrogation of constitutional values (emphasis supplied).”

Hence, it most respectfully submitted that, even if the information was shared, keeping

in mind the public good and welfare, the individual’s right to privacy cannot be

sacrificed on the anvil of fervid desire to find instantaneous solutions to systemic

problems such as unaccounted monies. It is the State’s first responsibility to promote

and protect human rights.33

1.2.8. Moreover, it is also submitted that the Convention nowhere mentions a system of checks

and balances for obtaining and sharing of information. It does not define clearly a

parameter as to whose information will be shared. It is thus, evident from the above that

no such procedure has been established by law which makes the sharing of information

by the Government of Britussia with the Government of Amersia unreasonable and thus

violative of right to privacy enshrined under Article 21.

32

2011 8 SCC 1. 33

U.N. Commission on Economic, Social and Cultural Rights, Statement to the Third Ministerial Conference of the

World Trade Organisation (Nov 26, 1999) UN Doc. E/C.12/1999/9, ¶ 6.




1.3. THAT, ARBITRARY DISCLOSURE OF BANK ACCOUNTS RESULTED IN THE LOSS OF PERSONAL

LIBERTY.

1.3.1. It is most humbly submitted that the expression 'personal liberty' used under Article 21

has been given a very wide and liberal interpretation by the Supreme Court.34

It means

the freedom of the individual to do as he pleases limited only by the authority of

politically organized society to regulate his action to secure the public health, safety, or

morals or of other recognized social interests. It is not used in a narrow sense but has

been used in Article 21 as a compendious term to include within it all those variety of

rights of a person which go to make up the personal liberty of a man.35

Personal Liberty

aims at freedom not only from arbitrary restraint but also to secure such conditions which

are essential for the full development of human personality.36

1.3.2. It is submitted that, in the instant case, the information of bank accounts of Amersian

citizens and PAOs having bank accounts in Britussia was shared in an arbitrary manner

by the Government of Britussia with the Government of Amersia. The result of this was

that the government of Amersia upon receiving many dossiers of information started to

leak information selectively of bank accounts held by its citizens/PAOs and their business

entities in Britussia to the Press. Some ministers in the Government of Amersia publicly

announced the names of their political and personal opponents whose names were listed

in the dossiers. Moreover, no investigations or any proceedings were initiated before

disclosing the information.37

1.3.3. It is also submitted that on account of the above mentioned facts the television channels

in Amersia ran continuous media trials of the persons whose names were selectively or

vindictively disclosed and created negative publicity for such individuals and their

businesses. There was hue and cry against such persons. Some political groups, NGOs,

34

Maneka Gandhi v. UOI, AIR 1978, SC 597. 35

Kharak Singh v. State of U.P. ,AIR 1963 SC 1295. 36

Ibid. 37

Compromis ¶ 9.




and social groups held violent protests in front of residences and business establishments

of persons whose names were leaked and caused substantial damage to their property.

Certain fringe elements of the society even attacked such persons, their family members

and their business associates leading to several casualties.38

1.3.4. It is submitted that, Article 21, though couched in negative language confers on every

person the fundamental right to life and personal liberty39

. This right has been given

paramount importance by our Courts.40

The object of article 21 is to prevent

encroachment upon personal liberty by the executive, save in accordance with law, and

in conformity with the provisions thereof.41

Personal Liberty also includes the right to

socialize with members of one's family and friends.42

1.3.5. It is to be understood that before a person is deprived of his life or personal liberty the

procedure established by law must be strictly followed and must not be departed from to

the disadvantage of the person affected.43

In each case where a person complains of the

deprivation of his life or personal liberty, the Court in the exercise of its constitutional

power of judicial review, has to decide whether there is a law authorizing such

deprivation and whether, in the given case, the procedure prescribed by such law is

reasonable, fair and just, and not arbitrary, whimsical and fanciful.44

Hence, it is

submitted that, procedure under which the information was exchanged under DTAA45

were arbitrary, whimsical and fanciful, and thus caused loss of personal liberty as they do

not contain any provision for checking the credibility of the information to be shared

which is a typical instance of abuse of power and departure from the procedure

established by law.

38

Compromis ¶ 10. 39

Bhagwati, J. In Maneka Gandhi v. UOI, (1978) 1 SCC 248. 40

Kehar Singh v. UOI, (1989) 1 SCC 204. 41

Narinderjit Singh Sahni v. Union of India, (2002) 2 SCC 210, 237-38 (¶ 57). 42

Kadra Pahadiya v. State of Bihar, AIR 1982 SC 1167 (¶ 2). 43

Makkhan Singh Tarsikka v. State of Punjab, AIR 1952 SC 27. 44

Francis Coralie Mullin v. Union Territory of Delhi, Administrator, AIR 1981 SC 746 (¶ 3). 45

Article 26 of the DTAA.




1.4. THAT, ARBITRARY DISCLOSURE OF BANK ACCOUNTS RESULTED IN THE LOSS OF BUSINESS.

1.4.1. It is humbly submitted before the Hon’ble Court that, in the present case, due to the

arbitrary sharing of information of Amersian citizens and PAOs having bank accounts in

Britussia by the Government of Britussia with the Government of Amersia and the

leaking of information by the Amersian government to the press, the people whose names

were leaked have suffered a loss of business because after the disclosure media trials

were run against them, there were protests against their business establishments and

certain fringe elements also attacked their associates. All this created a negative publicity

of their business resulting in loss of business,46

which is akin to loss of livelihood of such

persons whose names were leaked to the media.

1.4.2. Two persons one Mr. Ashra Banbani and the other Mr. Sabeer Bechriwal completely lost

their business as their business establishments were closed and their personal assets were

either looted or destroyed.47

Thus their source of livelihood was finished resulting in the

infringement of their right to livelihood enshrined in right to life and personal liberty

under article 21 of the Constitution. It is submitted that in any organized society, right to

live as a human being is not ensured by meeting only the animal needs of man. It is

secured only when he is assured of all facilities to develop himself and is freed from

restrictions which inhibit his growth.48

The word ‘life’ as employed by Article 21 takes

in its sweep not only the concept of mere physical existence but also all finer values of

life including the right to work and right to livelihood.49

This right is a fundamental

right guaranteed to all persons residing in India, citizens and non-citizens alike.50

46

Compromi ¶ 10. 47

Compromi ¶ 11 and ¶ 12. 48

Francis Coraile v UT of Delhi, AIR 1978 SC 597. 49

D. K. Yadav v J. M. A. Industries, (1993) 3 SCC 258. 50

Chairman, Railway Board v. Chandrima Das, AIR 2000 SC 988; David John Hopkins v. Union of India &

Ors., AIR 1997 Mad 366.




1.4.3. It is submitted that Supreme Court in the case of Olga Tellis and others v. Bombay

Municipal Corporation and others51

has observed that:

“An equally important facet of the right to life is the right to livelihood

because, no person can live without the means of living, that is, the means of

livelihood. If the right to livelihood is not treated as a part of the constitutional

right to life, the easiest way of depriving a person of his right to life would be

to deprive him of his means of livelihood to the point of abrogation.”

1.4.4. It is in this context in which it was laid by Douglas J. in Baksey52

, that, the right to work

is the most precious liberty that man possesses. It is the most precious liberty because,

it sustains and enables a man to live and the right to life is a precious freedom. It is

submitted that in the instant case, the Amersian citizens and PAOs having bank accounts

in Britussia lost their business/ livelihood due to protests and violence against them due

to the arbitrary sharing of information by the Government of Britussia without checking

the credibility of the same.

1.5. CONCLUSION FOR THE FIRST ISSUE:

In the light of the aforementioned contentions it is firmly established that the Government of

Britussia has violated various Fundamental Rights guaranteed under the Constitution of

Britussia to citizens of Amersia and PAOs by arbitrarily sharing their confidential information

with the Government of Amersia.

-x-x-x-x-x-x-

51

AIR 1986 SC 180 (¶ 32-33.). 52

(1954) 347 M.D. 442.




2. WHETHER ARTICLE 26 OF THE DTAA WAS LIABLE TO BE STRUCK DOWN TO THE EXTENT IT

WAS BEYOND THE POWER OF THE GOVERNMENT UNDER SECTION 90 OF THE INCOME TAX

ACT OF BRITUSSIA?

2.1. THAT ARTICLE 26(1)53

OF THE DTAA IS IN VIOLATION OF SECTION 90(1)(C) OF THE INCOME TAX

ACT OF BRITUSSIA.

2.1.1. It is most humbly submitted before the kind consideration of this Hon’ble court that

Article 26(1) violates Section 90 (1) (c) as the terms of the Article 26 are in contravention

with the parent or enabling act which in the present case is Section 90 (1) (c), thus liable

to be struck down.54

That Article 26(1)55

pronounces:

“The competent authority...

...in so far as the taxation thereunder is not contrary to the convention, in

particular for the prevention of fraud or evasion of such taxes.”

Whereas, Section 90 (1) (c) of the Income Tax Act of Britussia states that:

“For the exchange of information for the prevention of evasion or avoidance

of income tax chargeable under this act or under the corresponding law in force

in that country, or investigation of cases of such evasion or avoidance.”

2.1.2. As the provisions of the DTAA for the exchange of information was in particular for the

prevention of fraud, whereas, the parent or enabling act provides for transfer of

information for prevention of evasion or avoidance of Income Tax provided under the

Act. Thus, the rule making authority in this perspective travels beyond the scope of the

enabling act, hence liable to be declared ultra vires.56

53

Article 26(1) of DTAA – Exchange of Information – The competent authorities of the Contracting States shall

exchange such information (including documents) as is necessary for carrying out the provisions of the Convention

or of the domestic laws of the Contracting States concerning taxes covered by the Convention, insofar as the

taxation thereunder is not contrary to the Convention, in particular for the prevention of fraud or evasion of such

taxes. 54

Delhi Transport Undertaking v. B.B.L. Hajelay, AIR 1972 SC 2452. 55

See Supra 53. 56

Additional District Magistrate (Rev.) v. Sri Ram, (2000) 5 SCC 452.




2.1.3. Herewith the delegated legislation is challenged on the ground that it is ultra vires the

enabling Act57

as it is an accepted principle that the authority of the delegated legislation

must be exercised within the authority and the delegate cannot make a law which runs in

contravention with the principle of the enabling act. It is well settled that the rule making

powers conferred by the parent act does not enable the rule making authority to make a

rule which is inconsistent or repugnant to the enabling Act. If the rule cannot be

reconciled with the parent Act, it must be struck down.58

2.2. THAT PROVISIONS INVOLVING TRANSFER OF INFORMATION RELATING TO CAPITAL IS BEYOND THE

SCOPE OF SECTION 90 (1)(C) OF INCOME TAX ACT OF BRITUSSIA.

2.2.1. It is most humbly submitted before the kind consideration of this Hon’ble Court that the

provisions relating to transfer of information involving capital goes beyond the scope

of Section 90 (1)(c). It is a settled principle that income does not include capital under the

meaning of “income” under Section 2(24). The same has been held in the case of Cadell

Weaving Mill Co. vs. CIT 59

and was upheld by the Apex Court in CIT vs. D.P. Sandu

Bros. Chember (P) Ltd.60

Later the same was reiterated in a recent case of Vodafone

India Services Pvt. Ltd. v. Union of India and Ors.61

It was observed in the case of

Cadell Weaving Mills Co. inter alia that:

“It is well settled that all receipts are not taxable under the Income tax Act.

Section 2(24) defines “income”. It is no doubt an inclusive definition. However, a

capital receipt is not income under Section 2 (24) unless it is chargeable to tax as

capital gains under Section 45.”

2.2.2. It is further submitted that, as per the provisions of Article 26 (1)62

reads:

57

Wade, Administrative Law,(1998), p. 863. 58

Municipal Corporation of Greater Bombay v. Nagpal Mills & Anr., (1988) 2 (SCC) 466: AIR 1988 SC 1009. 59

249 ITR 265. 60

273 ITR 1. 61

Bombay High Court WP/871/2014. 62

See Supra 53.




“The competent authority of the contracting state shall exchange such

information (including documents) as is necessary for carrying out the provisions

of the Convention or of the domestic laws of the Contracting States concerning

taxes covered by this convention...”

Moreover, Article 2 (2)63

of the DTAA reads as:

“There shall be regarded as taxes on income and on capital all taxes

imposed on total income, on total capital, or on elements of income or of

capital...”

Section 90(1) (c) specifically provides for transfer of information pertaining to income

tax chargeable under the Income Tax Act or the corresponding law prevailing in the other

country. Herewith, it is submitted that the transfer of information relating to capital goes

beyond the view of this DTAA as capital does not fall within the definition of income

within Section 2(24) of the Income tax Act. Thus, transfer of information relating to

capital or total capital would be beyond the scope of the parent or enabling act as it is a

delegated piece of legislation which is in excess of the powers conferred by the parent

act. Hence the Government of Britussia was wrong in sharing the information beyond

the scope of Art. 26.

2.3. THAT THE PROVISIONS OF ARTICLE 26 PROVIDE UNCANALIZED AND UNCONTROLLED POWER TO

THE COMPETENT AUTHORITY.64

2.3.1. It is most humbly submitted before the kind consideration of this Hon’ble court that, it is

an established doctrine of delegated legislation that if the subordinate authority keeps

63

Article 2(2) of the DTAA – Taxes Covered – There shall be regarded as taxes on income and on capital all taxes

imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the

alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as

well as taxes on capital appreciation. 64

Article 3 of DTAA – General Definitions -

1. (h) the term Competent Authority means:

(i) in the case of Amersia, the Central Government in the Ministry of Finance (Department of Revenue) or their

authorised representative;

(ii) in the case of Britussia, the Central Government in the Ministry of Finance (Department of Revenue) or their

authorised representative;




within the powers delegated, the delegated legislation is upheld valid; but if it does not

the court will certainly quash it.65

The provisions of Article 26 provide uncanalized and

uncontrolled power to the competent authority due to the fact that the process of

exchange of information is left to the discretion of the competent authority. Such a

provision provides with the executive uncanalized and uncontrolled power to act on their

own accord in absence of any guidelines framed by the legislature.

2.3.2. It is apt to excerpt here an oft-quoted observation from Vasantlal Maganbhai

Sanjanwala v. State of Bombay & Ors.66

which was affirmed in Devi Das Gopal

Krishnan & Ors. v. State of Punjab & Ors.67

:

"An over burdened legislature or one controlled by a powerful executive

may unduly overstep the limits of delegation. It may not lay down any policy at

all; it may declare its policy in vague and general terms; it may not set down

any standard for the guidance of the executive; it may confer an arbitrary

power on the executive to change or modify the policy laid down by it without

reserving for itself any control over subordinate legislation. This self effacement

of legislative power in favor of another agency either in whole or in part is

beyond the permissible limits of delegation. It is for a Court to hold on a fair,

generous and liberal construction of an impugned statute whether the

legislature exceeded such limits. But the said liberal construction should not be

carried by the Courts to the extent of always trying to discover a dormant or

latent legislative policy to sustain an arbitrary power conferred on executive

authorities. It is the duty of the Court to strike down without any hesitation any

arbitrary power conferred on the executive by the legislature."

2.3.3. As it has been demonstrated by the functioning of the agreement in Amersia, where due

to the agreement suffering from the vices of excessive delegation, providing the

65

Yasin v. Town Area Committee, AIR 1952 SC 115. 66

AIR 1961 SC 4: (1961) 1 SCR 341. 67

1967 SCR (3) 557.




executive with uncontrolled and uncanalised power, led to selective revelation of names

grounded on personal and political vendetta or rivalry. Such a delegation is not only

abridging the basic function of the legislation, but, also posses two way threats. First one

being similar to the event which took place in the Amresia, such an incident can also

occur if the agreement continues to suffer from such vices. The second form of threat

could be in the form of business entities targeting each other due to the unspecified

provisions of the agreement

2.3.4. It is further submitted that a legislation which does not contain any provision which is

directly discriminatory may yet offend against the guarantee of equal protection if it

confers upon the executive or administrative authority an unguided or uncontrolled

discretionary power in the matter of application of the law.68

2.3.5. It is most humbly submitted that per curiam Sudhir Chandra v. Tata Iron & Steel Co.

Ltd.69

, Hon’ble Supreme Court observed that:

“…our Constitution envisages a society governed by rule of law. Absolute

discretion uncontrolled by guideline which may permit denial of equality before law

is the antithesis of rule of law. Absolute discretion not judicially reviewable inheres

the pernicious tendency to be arbitrary and is therefore violative of Article 14.

Equality before law and absolute discretion to grant or deny the benefit of the law

are diametrically opposed to each other and cannot co-exist.”

2.3.6. It is further submitted that, in Sitaram Vishambhar Dayal v. State Of U.P.70

, Supreme

Court has settled its view that no articulate norms can be laid down to bring the provision

into the colour of excessive delegation. It totally depends upon the facts and

circumstances of each individual case and also the nature of power delegated and purpose

68

State of W.B. v. Anwar Ali Sarkar, AIR 1952 SC 75; Suraj Mall Mohta & Co. v. A.V. Visvanathasastri, AIR

1954 SC 545; District Registrar & Collector, Hyderabad v. Canara Bank (2005) 1SCC 496, 524-525 (¶ 57); Air

India v. Nargesh Meerza, (1981) 4 SCC 335: Municipal Committee, Patiala v. Model Town Residents Assn., AIR

2007 SC 2844 (¶ 57). 69

AIR 1984 SC 1064,1071: (1984) 3 SCC 369. 70

AIR 1972 SC 116.




intended to be achieved. Further, it is an established doctrine of delegated legislation

that if the subordinate authority keeps within the powers delegated, the delegated

legislation is upheld valid; but if it does not the court will certainly quash it.71

2.3.7. It is most humbly submitted that the Supreme Court in catena of cases72

have even went

on saying that the vice of conferring unguided discretion on an administrative

authority, which offends against Article 14 because it empowers arbitrary action, is

akin to the vice of unreasonableness under Article 19 as well as excessive delegation or

abdication on the part of the Legislature. Thus it is submitted that the provisions

providing the executive with such unguided discretionary powers goes beyond the limits

of delegated legislation as it goes on to provide arbitray powers which is ultra vires the

Constitution.

2.4. CONCLUSION FOR THE SECOND ISSUE:

In the light of the aforementioned contentions it is firmly established that Article 26(1) of the

DTAA is in violation of Section 90(1)(c) of the Income Tax Act of Britussia, also provisions

involving transfer of information relating to capital is beyond the scope of Section 90 (1)(c) of

Income Tax Act of Britussia. Moreover, Article 26 provides uncanalized and uncontrolled power

to the competent authority. Hence, the Government of Britussia was wrong in sharing the

information beyond the scope of Art. 26 and the same is liable to be struck down to the extent it

is beyond the power of the Government under Section 90 of the Income Tax Act of Britussia.

-x-x-x-x-x-x-

71

Yasin v. Town Area Committee, AIR 1952 SC 115. 72

Kaushal P.N. v U.O.I., AIR 1978 SC 1457(¶ 60-62); Avinder Singh v. State of Punjab, AIR 1979 SC 321 (¶ 9).




3. WHETHER THE GOVERNMENT OF BRITUSSIA WAS WRONG IN SHARING FURTHER

INFORMATION CONSEQUENT TO THE VIOLATION OF THE SECRECY CLAUSE UNDER

ARTICLE 26 OF THE DTAA?

3.1. It is submitted that article 26(2) of the Convention specifically mentions that information

received shall be treated as secret and it shall be disclosed only to persons or authorities

including courts or administrative bodies.73

Further as per Article 23(3) the authorities shall develop appropriate condition for

exchange of information regarding tax avoidance.74

3.2. However in the instant case the Government of Amersia having upon received many

dossiers containing information under the DTAA from the Government of Britussia started

to selectively leak information of bank accounts held by citizens of Amerisa and PAOs in

Britussia. Some ministers in the Government of Amersia publicly announced the names of

their political and personal opponents whose names were listed in the dossiers without even

initiating any investigations against them so as to determine whether they are guilty of tax

evasion or not.75

3.3. Based on above mentioned facts the television channels in Amersia ran continuous media

trials of the persons whose names were selectively or vindictively disclosed and created

negative publicity for such individuals and their businesses. There was hue and cry against

such persons. Some violent protests infront of residences and business establishments of

persons whose names were leaked and caused substantial damage to their property, also

73

Article 26 of DTAA – Exchange of Information.

(2) Any information received by a Contracting State shall be treated as secret in the same manner as information

obtained under the domestic laws of that State, it shall be disclosed only to persons or authorities (including courts

and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of,

or the determination of appeals relation to, the taxes which are the subject, of the Convention 74

Article 26 of DTAA – Exchange of Information.

(3) Such persons authorities shall use the information only for such purposes but may disclose the information in

public court proceedings or in judicial decisions. The competent authorities shall, through consultation, develop

appropriate conditions, methods and techniques concerning matters in respect of which such exchange of

information shall be made, including, where appropriate, exchange of information regarding tax avoidance. 75

Compromis ¶9.




such persons,their family members and their business associates were attacked leading to

several casualties.76

3.4. It is further submitted that Mr. Ashra Banbani, a Citizen of Amersia but a Resident of

Britussia, whose name was also disclosed, lost all his family members in an attack on his

house in the capital of Amersia. He also suffered loss of business and property; also media

in Britussia harassed him and ran negative propaganda regarding his import businesses in

Britussia.77

Government of Amersia also leaked information regarding Mr. Saber

Bechrival, a PAO having business interest in Britussia. Mr Saber Bechrival was a Resident

of a Third Country since a decade and was not having any taxable income in Amersia over

the last several decades. He also met the same fate as that of Mr. Ashra Banbani.78

3.5. It is submitted that, the Government of Britussia is shying away from taking any action

against the Government of Amersia in spite of the above mentioned facts because the

Governemnt of Britussia is more concerned about its political interest rather than the

interests of the citizens of Amersia and PAOs who are also under the protective umbrella

of right to life and personal liberty enshrined in article 21 of the Constitution.

3.6. It is also submitted that political expediency cannot be a ground for not fulfilling the

constitutional obligations inherent in the Constitution of India and reflected in section 90 of

the Act. The article confers power to lay down a law which is not contemplated under the

Act on the ground of political expediency, which cannot but be ultra vires. Any purpose

other than the purpose contemplated by section 90 of the Act, however bona fide it be,

would be ultra vires the provisions of section 90 of the Income tax Act. While political

expediency will have a role to play in terms of Article 73 of the Constitution, the same is

not true when a Treaty is entered into under the statutory provision like section 90 of the

Act.79

76

Compromis ¶ 10. 77

Compromis ¶ 11. 78

Compromis ¶ 12. 79

Union of India & Anr. v. Azadi Bachao Andolan & Anr., AIR 2004 SC 1107 : (2004) 10 SCC 1.




3.7. Further, under the provisions relating to Exchange of Information, any information

received by a Contracting State shall be treated as secret in the same manner as information

obtained under the domestic laws of that Contracting State. Thus, the information received

under the provisions of DTAAs/TIEAs/Multilateral Convention is also subject to the

restrictions imposed through section 13880

read with section 28081

of the Income Tax Act,

1961. These provisions have been put in so that the taxpayers have confidence in the

system and are ensured that their sensitive financial information is not disclosed

inappropriately, whether incidentally or by accident.82

3.8. CONCLUSION FOR THE THIRD ISSUE:

In the light of the aforementioned conditions it can be established that, the Government of

Britussia was wrong in sharing further request from Government of Amersia consequent to the

violation of secrecy clause under Article 26 of the DTAA as the government of Amersia has

violated the secrecy clause which is evident from the fact that members of the Amersian

Government has disclosed information under DTAA to the press which has caused violence

against those people whose names were so disclosed.

-x-x-x-x-x-x-

4. WHETHER THE GOVERNMENT OF BRITUSSIA WAS WRONG IN SHARING THE INFORMATION

OF A NON – RESIDENT?

80

Section 138 of Income Tax Act, 1961 – Disclosure of information respecting assessees - Subject to certain

exceptions, no public servant shall furnish any information contained in any statement made, return furnished or

accounts or documents produced under the provisions of the Act, or in any evidence given, affidavit or depositions

made in the course of any assessment proceedings under the Act. (relevant portion only) 81

Section 280 of Income Tax Act, 1961 – Disclosure of particulars by public servants – (1) If a public servant furnishes any information or produces any document in contravention of the provisions of

sub-section (2) of section 138, he shall be punishable with imprisonment which may extend to six months, and shall

also be liable to fine.

(2) No prosecution shall be instituted under this section except with the previous sanction of the Central

Government. 82

See Supra 79.




4.1. THAT AMERSIA – BRITUSSIA DTAA WAS ONLY BINDING ON THE RESIDENTS OF THE CONTRACTING

STATES.

4.1.1. It is humbly submitted before this Hon’ble Court that, Article 183

of the DTAA sets the

personal scope of Agreement between the two Contracting States, i.e., Britussia and

Amersia, according to which the convention shall be binding on the residents of one or

both of the Contracting States only. The term “Resident” is defined under Article 4(1) in

following terms:

“For the purposes of this Convention, the term "resident of a Contracting

State" means any person who, under the laws of that State, is liable to tax therein by

reason of his domicile, residence, place of management, place of incorporation or

any other criterion of a similar nature, and also includes that State and any local

authority thereof. This term, however, does not include any person who is liable to

tax in that State in respect only of income from sources in that State.”84

4.1.2. The term “resident” is also defined under Income Tax Act, 1961 under Sec. 2(42) as

follows:

“’resident’ means a person who is resident in Britussia within the meaning

of section 685”.

Thus, a resident is a person, if alternatively he:

a. Is in Britussia for a period amounting in all to 182 days or more in the previous year.

83

Article 1 of DTAA – Personal Scope – This Convention shall apply to persons who are residents of one or both

of the Contracting States. 84

Article 4(1) of DTAA. 85

Section 6 of DTAA – Residence in India – For the purposes of this Act,—

(1) An individual is said to be resident in Britussia in any previous year, if he —

(a) is in Britussia in that year for a period or periods amounting in all to one hundred and eighty-two days or more ;

or

(b) 43[* * *]

(c) having within the four years preceding that year been in Britussia for a period or periods amounting in all to three

hundred and sixty five days or more, is in Britussia for a period or periods amounting in all to sixty days or more in

that year.




b. Is in Britussia for 60 days or more during the relevant previous year & has been in

Britussia for 365 days or more during 4 previous years immediately preceding the

relevant previous year.

4.1.3. Thus, deriving the meaning of “resident” from both the Article 4(1) of Amersia –

Britussia DTAA and Sec. 2(42) and Sec. 6 of the Income Tax, 1961, it is hereby humbly

submitted that, the provisions of the said DTAA were only applicable to persons who

were the residents of either Amersia or Britussia, while any person who is non-resident

in both the countries fall outside the scope of DTAA and the provisions of DTAA shall

not be binding upon him. Hence, what is really relevant to see is whether or not the

person in question is the resident of the contracting state,86

and merely having ‘business

interest’ in a state does not qualifies a person to become a resident of that state.

4.2. THAT THE GOVERNMENT OF BRITUSSIA WAS NOT BOUND TO SHARE THE INFORMATION OF THE

NON-RESIDENTS.

4.2.1. The counsel has already stated above that, the provisions of the Amersia – Britussia

DTAA were applicable only to residents of either contracting states. Hence, Article 26

which provides for exchange of information between the contracting states, for purposes

stated under Artcile 26(1), can’t be made applicable to the non – residents and

consequently the information of non – residents cannot be exchanged under DTAA, and

for the same Government of Britussia is not bound.

4.2.2. As per the Exchange of Information provisions of the DTAA, the Competent Authorities

shall exchange information as is “foreseeably relevant” for administration and

enforcement of the domestic laws concerning taxes.87

It is necessary that in the request

made, the foreseeable relevance of the information for the administration and

86

Hindustan Petroleum Corporation Ltd. v. ADIT, (2010) 130 TTJ 518 (Mum.) 87

OECD, OECD Model Tax Convention and its Commentary: Update to Article 26, Organisation for Economic Co-

operation and Development (Jan 10, 2015, 12:21pm), http://www.oecd.org/ctp/exchange-of-tax-

information/120718_Article%2026-ENG_no%20cover%20%282%29.pdf.




enforcement of Tax Laws is demonstrated. Hence, it is the duty of the requested state to

look that information is not sought as a tool to engage in “fishing expeditions” or to

request information that is unlikely to be relevant to the tax affairs. The provisions for

Exchange of Information do not obligate the requested State to provide information in

response to requests that are “fishing expeditions”88, i.e. speculative requests that have

no apparent nexus to an ongoing specific inquiry or investigation.89

4.2.3. It is therefore humbly submitted that, information requested by the Amersian

Government was merely a device to satisfy its tussle with political and personal

opponents and it only requested the information by the way of “fishing expeditions” and

as such there was no foreseeable relevance of the information requested for the

administration and enforcement of Tax Laws. This ipso facto becomes more clear when

after receiving many dossiers containing information under the DTAA from the

Government of Britussia, Government of Amersia started selectively leaking information

of bank accounts to the Press, moreover, some ministers in the Government of Amersia

also publicly announced the names of their political and personal opponents whose names

were listed in the dossier received, even before any investigation or other proceedings

could be initiated.90

Hence, it was not obligatory on the part of Government of Britussia

to share the information of persons who are not the residents of either of the contracting

states.

4.3. CONCLUSION FOR THE FOURTH ISSUE:

In the light of the aforementioned contentions it is firmly established that Amersia – Britussia

DTAA was only binding to the residents of the contracting states and was not applicable to

88

The examples of such “fishing expedition” would include, for instance, request for details of all the bank accounts

of all residents of the requesting State maintained in the banks of the requested State or details of all shareholders

resident of requesting State of a company located in requested State. Hence, the requests made should be specific 89

See Supra 74. 90

Compromis ¶ 9.




persons who were neither the Residents of Britussia nor Amersia, and hence, it was not

obligatory on the part of the Government of Britussia to entertain such requests and share their

information.

-x-x-x-x-x-x-



-DRAWN AND FILED BY THE COUNSEL FOR THE PETITIONER- Page XII

PRAYER

Wherefore in the light of facts stated, issues raised, arguments advanced and authorities cited, it

is most humbly prayed before this Hon’ble Supreme Court, that it may graciously be pleased to-

1. Allow the instant public interest litigation.

2. Issue the writ in the nature of mandamus to restrain the Government of Britussia from

sharing the personal data of citizens of Amersia and Persons of Amersian origin having bank

accounts in Britussia, with the Government of Amersia.

3. Hold the provisions Article 26 of AMERSIA-BRITUSSIA DTAA which are beyond the

powers of s.90 of the Income-Tax Act of Britussia as ultra – vires.

And pass any other order in favor of the Petitioner which this Court may deem fit and proper in

the circumstances of the case.

All of which is most humbly and respectfully submitted.

Sd/-

Counsels for the Petitioner

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