Section 138 of ITA, 1961 : Section 138: Disclosure Of Information Respecting Assessees

Explanation using Example

Imagine a scenario where the Enforcement Directorate (ED), which is responsible for enforcing economic laws and fighting economic crime in India, is investigating a case of money laundering. The ED suspects that an individual is involved in transferring money illegally out of the country. To build their case, they need more information about the individual's financial transactions and tax history.

Under Section 138(1)(a) of the Income-tax Act, 1961, the ED can request the Income Tax Department to share relevant tax-related information about the individual. The Income Tax Department, upon receiving such a request, may provide the necessary details to the ED if it is considered necessary for the ED to perform its functions under the law dealing with foreign exchange.

This cooperation between the Income Tax Department and the ED could potentially lead to the discovery of crucial evidence for the money laundering investigation, demonstrating how Section 138 enables different authorities to share information to uphold the law.