P.V.UTHAMAN NAIR V. DIRECTOR OF INCOME TAX

WP(C)/3670/2010

AI Insights

The petitioner, P.V. Uthaman Nair, approached the Kerala High Court seeking a writ of mandamus to direct the Income Tax authorities to pay him a reward for information he provided, which led to tax recoveries. The respondents contended that rewards are not a matter of right and are governed by specific guidelines, which consider the quantum of tax recovered and the finalization of proceedings. The court examined the guidelines for rewards to informants and acknowledged that while the petitioner had provided valuable information leading to tax recoveries, the determination of the reward amount is contingent upon the final assessments and is not an immediate entitlement.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 763349 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 23-07-2010
• Assessment Year: misc
• Other Referred Cases: Union of India v. C. Krishna Reddy
• Laws Referred To: Union of India v. C. Krishna Reddy (2004(163) ELT 4), 288 ITR 578 (KER), 234 ITR 431, 254 ITR 618
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH; T P M IBRAHIM KHAN
• Keywords: Income Tax Department; Reward for informant; Tax Recovery; Writ of Mandamus; Guidelines for rewards
• Section: 11(1); 13(1); 15(1)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON FRIDAY, THE 23RD JULY 2010 / 1ST SRAVANA 1932 WP(C).No. 3670 of 2010(G) --------------------------------------- PETITIONER(S): ---------------------- P.V.UTHAMAN NAIR, PRAYIL HOUSE, P.O.CHIRAKKAL, KANNUR-11. BY PARTY-IN PERSON RESPONDENT(S): --------------------------- 1. DIRECTOR OF INCOME TAX, INVESTIGATION, COCHIN. 2. DIRECTOR GENERAL OF INCOME TAX, INVESTIGATION, COCHIN. 3. CHIEF COMMISSIONER OF INCOME TAX, COCHIN, (KERALA STATE). 4. ASSISTANT DIRECTOR OF INCOME TAX, INVESTIGATION, CALICUT. 5. FINANCE SECRETARY/CHAIRMAN, CBDT, REVENUE BOARD, MINISTRY OF FINANCE, NEW DELHI. R1 TO R4 BY ADV. SRI.JOSE JOSEPH, SC, INCOME TAX R5 BY ADV. SRI.T.P.M.IBRAHIM KHAN,ASST.S.G OF INDIA THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23/07/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss P.R. RAMACHANDRA MENON, J. = = = = = = = = == = = = == = = = = = = W.P.(C) No. 3670 OF 2010 = = = = = = = = == = = = = = = = = = = = = DATED THIS, THE 23RD DAY OF JULY, 2010. J U D G M E N T Petitioner, who is stated as an informant to the Income Tax Department, has come before this court seeking a writ of mandamus, directing respondents 1 to 4 to pay reward to him for the information made available by him as evidenced by Exts. P1 and P8, without delay. 2. The respondents have filed a statement pointing out the actual facts and circumstances including that the reward cannot be claimed as a matter of right and that it is payable only subject to the guidelines prescribed in this regard. It is stated that it will also be on the basis of quantum of tax recovered, pursuant to the information furnished by the informant and subject to the finalisation of the proceedings. It is, however, agreed that the petitioner was an informant and based on the information furnished by him, a raid was conducted on 26.2.2009 at the premises of the party concerned and in the course of such raid, various materials were unearthed. It is also specifically stated in Para 5 of the said statement that the petitioner has already been informed vide letter WP(C) 3670/2010 2 dated 3.6.2009 that the eligibility for any reward will be considered on realization of tax, by the competent authority in due course and as informer, he will be informed of the f reward, if any, is sanctioned. 3. Heard the petitioner, who appeared as the 'party in person' and the learned standing counsel for the respondents at length. Referring to the relevant provisions of law, the learned standing counsel submits that reward cannot be claimed as a matter of right and the jurisdiction of this Court for issuing a writ of mandamus to enforce the same stands rather fettered, particularly, in view of the law declared by the Apex court in Union of India v. C. Krishna Reddy (2004(163) ELT 4). Reliance is sought to be placed on the decisions reported in 288 ITR 578 (KER), 234 ITR 431 and 254 ITR 618 as well. 4. Petitioner, referring to the contents of the reply affidavit filed by him and the documents produced as Exts.P9 to P11, submits that as per the 'reward scheme' which is produced and marked as Ext.P11, there is a provision to sanction advance reward as well. Learned standing counsel for the Department strongly refuted the said contention stating that Ext.P11 is not a scheme applicable to the Income Tax Department obviously, in view of the nature of the contents as it appears in Ext.P11. The learned standing counsel also produced a copy of the Guidelines for WP(C) 3670/2010 3 grant of Rewards to Informants, 2007, as published by the Ministry of Finance, Government of India, Department of Revenue (CBDT). The various circumstances for determining the amount of reward are prescribed under Clause 11.1. The amount of reward, as provided under Clause 13(1) depends upon the extent of revenue collected because of the information provided by the informant. There is also a provision under Clause 15(1) to provide interim award authorizing the competent authority to grant interim reward not exceeding 5% of the extra tax levied or which can reasonably be expected to be levied but subject to a ceiling of Rs. 1,00,000/- to an informant, in a case where he is satisfied that (a) the information, evidence or documents given by the informant are likely to lead to substantial gain to revenue; (b) the assessment made, or to be made on the basis of such information/evidence or documents is likely to be sustained in appeal and (c) the taxes assessed or to be assessed on the basis of the information or evidence or documents furnished by the informant are likely to be recovered. 5. Petitioner submits that, altogether 23 cases have been registered on the basis of the information furnished by him and the assessment has been finalized almost in 14 cases. The factual data WP(C) 3670/2010 4 submitted by the petitioner is sought to be controverted by the standing counsel, however, stating that the assessment in respect of the relevant proceedings will be fialised at the earliest, at any rate, within six months. Learned standing counsel points out that the delay, if any, is not due to the fault on the part of the authorities and various circumstances will have to be taken note of and given due credit to before finalising the reward. In any view of the matter, the authority of this Court to intervene and issue a writ of mandamus stands answered in the negative by virtue of the decision reported in Union of India v. C. Krishna Reddy (2004 (163) ELT 4. (S.C.). This being the position, this Court does not propose to examine or weigh the various factors which will have to be taken into consideration while deciding a claim for grant of reward. Petitioner shall be given due intimation as to the total revenue generated because of the information supplied by him and proportionate reward shall be granted to him in due course, in tune with the guidelines as mentioned above. With the above observation, the writ petition is disposed of. P.R. RAMACHANDRA MENON, (JUDGE) KNC/- "