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  • Writer's pictureGavin Jayapal

The confidentiality of income tax documents in Court proceedings

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The confidentiality of income tax documents

The Court of Appeal recently (15.06.2022) explored an exception to this general rule in Dato’ Sri Andrew Kam v Raub Mining & Development Company & 1 or. [Civil Appeal No.:W-02(IM)(NCC)-1687-11/2020].

His Lordship Kamaludin Said, writing on behalf of the COA, outlined the core issue succinctly:

[28…In other words, the sole question before this Court is whether the tax documents sought to be adduced by the Appellant in the said five (5) OS Actions are prohibited from use in Court and/or inadmissible under Section 138 of the ITA.

The Court of Appeal’s findings

The COA held that the usage of tax documents ran contrary to Section 138 ITA and that the same ought to be expunged.

In its Grounds, the COA first looked at Section 138 ITA. It defines “classified material” as follows:

“classified material” means any return or other document made for the purposes of this Act and relating to the income of any person or partnership and any information or other matter or thing which comes to the notice of a classified person in his capacity as such;

The COA stated:

Income tax documents
23. It is not disputed that the documents sought to be adduced by the Appellant in the said five (5) Originating Summonses vide the supplementary affidavits are income tax documents. The tax documents are the documents mentioned in paragraph 11 of the learned judge’ grounds of judgment.
25. It is not disputed that the tax documents were obtained by the Appellant from the Respondents’ tax agents without the Respondents’ consent or authorization. The tax documents were prepared and/or submitted by Respondents’ tax agents and/or instructions received by the tax agents from the Respondents in the course of preparation of the said documents.

An issue before the High Court was whether the Appellant was indeed a director of the Respondent-companies. The Appellant argued that the tax documents were relevant evidence, given that they purportedly listed him (Appellant) as a director.

The COA noted the Appellant’s submission on relevance [paragraphs 29-40]:

29. The Appellant’s argument is that the tax documents are highly relevant to the issues in all the OS Actions to show, inter alia, that the Appellant is indisputably a director of the Respondents’ Companies.

The COA gave short shrift to this submission. It noted as follows:

41. We are only concerned with the reading of section 138 of the ITA and whether the decision of the learned judge is correct. Secondly, on the confidentiality aspect of the tax documents, in our view, it is also not in issue. We agree with the Appellant that the tax documents are “classified material” and we also agree on the rationale submitted by him in the submissions which also refer to the Indian and English position that the confidentiality of the documents must be protected. However, we did not agree with the Appellant that anybody including him can use the tax documents in their possession and if it is admissible, the court is not concerned with how the evidence was obtained and the documents can be adduced in evidence.
49. As such, pursuant to section 138(2) of the ITA, the tax documents are prohibited from being produced or used in Court. We agree with the Respondents that the language of the statute (“No classified material shall be produced or used…”) is imperative and therefore the prohibition is mandatory.
51. Therefore, section 138(2) of the ITA absolutely excludes any exercise of judicial power to admit the tax documents save only where the exceptions apply. And, it is obvious that none of the exceptions apply here.

The COA deals with the argument on relevance

The COA also considered the relevance argument. It held that the maxim of generalibus specialia non derogant was applicable. The specific wording of Section 138 ITA would serve to displace the common law principles as-pertains disclosure and utilisation of evidence:

55. On the admissibility of evidence, it is not disputed that the Evidence Act 1950 is a statute that applies generally to the admission of evidence. Section 138(2) of ITA is a specific provision that governs the production and admissibility of a specific category of documents. Applying the maxim generalibus specialia non derogant, section 138(2) overrides any rule governing the admissibility of evidence including common law principles relating to admissibility of illegally obtained evidence.


The COA concluded by dismissing the appeals and affirming the High Court’s findings:

58. In the circumstances, we agree with the High Court decision that the tax documents shall not be allowed to be adduced in evidence and to be expunged in its entirety...

A key takeaway from this decision would be that income tax records are not a free-for-all. Practitioners must be circumspect in the utilisation of the same and must ensure that the prerequisites for production are fulfilled.

Speaking from personal experience, I have been approached by clients intending to utilise the tax documents of the opposite party during trial. This is especially so for corporate disputes involving shareholders and directors. Thankfully, I refrained from introducing said documents upon reading the specific injunctions contained in Section 138.

This recent pronouncement of the COA makes the position of law crystalline for all.



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