2007 (8) TMI 282 - HC - Income Tax

Reward to those furnishing information about concealed income in a suit the plaintiff, a retired income tax practitioner, contending that he had supplied information about the concealed income of certain persons, & based on this dept. had generated more than Rs 1 crore so he was entitled to reward of 5 lac as the plantiff was unable to justify his case of generation of the amount as averred, he failed to discharge his basic burden of proving his case so relief can t be granted to plantiff

Issues Involved:
1. Entitlement of the plaintiff to a reward based on provided information.
2. Validity of the defendants' claims regarding the sale of shares and dividend income.
3. Pre-existence of the information provided by the plaintiff in the defendants' records.
4. Impact of the plaintiff's information on revenue generation.
5. Applicability of guidelines and rules regarding rewards.

Detailed Analysis:

Issue 1: Entitlement of the Plaintiff to a Reward
The plaintiff claimed entitlement to a reward based on information provided about concealed income. The plaintiff relied on a 1964 announcement by the Central Board of Direct Taxes promising rewards for such information. However, no specific guidelines or instructions were presented in court to support the plaintiff's claim. The plaintiff cited the doctrine of promissory estoppel, referencing Narayan Chandra Chakraborty v. Union of India, arguing that the government was bound to honor its promise. Conversely, the defendants cited Motilal Kishangopal Thanvi v. Union of India, asserting that rewards are discretionary and not enforceable rights. The Supreme Court's stance in Union of India v. R. Padmanabhan was also considered, emphasizing that rewards are ex gratia payments subject to guidelines and discretion. The court found that the plaintiff failed to prove that the information provided led to any additional revenue generation, thus failing to establish a basis for the reward claim.

Issue 2: Validity of Defendants' Claims about Shares and Dividend Income
The defendants argued that the sale of shares of Hindustan Sugar Mills Ltd. was set aside, and the shares were restored to the Pittie family, resulting in no surplus dividend income. The court found no sufficient evidence from the plaintiff to counter this claim, thus supporting the defendants' position.

Issue 3: Pre-existence of Information in Defendants' Records
The defendants contended that the information provided by the plaintiff was already on their files and disclosed in the income tax returns of the assessees. The plaintiff failed to provide evidence to refute this, leading the court to accept the defendants' assertion.

Issue 4: Impact of Plaintiff's Information on Revenue Generation
The plaintiff claimed that the information provided led to significant revenue generation, warranting a reward. However, the court noted that the plaintiff did not produce evidence to substantiate the claim of generated revenue. The burden of proof lay with the plaintiff, who did not meet this requirement. Consequently, the court concluded that no additional revenue was generated due to the plaintiff's information.

Issue 5: Applicability of Guidelines and Rules Regarding Rewards
The court emphasized that rewards are subject to guidelines and the discretion of the competent authority. The plaintiff did not present any guidelines to support the reward claim. The court referred to the Supreme Court's ruling in Union of India v. Padmanabhan, which highlighted that rewards must conform to existing guidelines and policies. Since the plaintiff failed to prove the generation of additional revenue, the court dismissed the claim for a reward.

Conclusion:
The court dismissed the suit, concluding that the plaintiff failed to prove entitlement to a reward based on the information provided. The plaintiff did not substantiate the claim of revenue generation, and no guidelines supporting the reward claim were presented. The court struck down issues 2 to 13 as redundant, given the failure to prove the primary claim. The suit was dismissed with no costs awarded.

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