GUIDELINES FOR GRANT OF REWARDS TO INFORMANTS LEADING TO RECOVERY OF IRRECOVERABLE TAXES, 2015

[Mr. M. GOVINDARAJAN]

The Department issued circular/instruction vide No. 7 of 2015, dated 26.08.2015 to its Department officers giving guidelines for the grant of rewards to informants leading to recovery of irrecoverable taxes, 2015.   These guidelines will be applicable with effect from 01.04.2015.   The grant and payment of reward for the information provided before 31.03.2015 will continue to be regulated by ‘Guidelines for Grant of Rewards to Informants, 2007’.

Who is an informant?

A person will be considered to be an informant eligible for reward under these guidelines, if such person furnishes specific information in relation to assets/untraceable assessees concerning irrecoverable taxes.

Reward when eligible?

The claim of reward shall be confined to cases where action is already taken in pursuance of the information.  The individuals will be eligible for rewards based on the tax collected as a result of any administrative or judicial action resulting from the information provided.   The quantum of tax collected will be determined only after all assessments have become final and no appeal/revision/other litigation is pending.

Nature of reward

The reward will be in the nature of ex-gratia.  No assignment thereof made by the informants will be recognized.  The  authority competent to grant rewards may grant reward to heirs or nominees of an informant of an amount not exceeding the amount that would have been payable to the information had he not died.

Reward amount

The reward would not exceed 10% of the tax, recovery of which is directly attributable to the information/documents supplied by the informant, subject to a ceiling of ₹ 15 lakhs.   The Board may relax the ceiling of ₹ 15 lakhs on the basis of recommendation of the Committee.

Procedure for giving information

The information provided must be supported by facts/documents and should not be speculative, vague,   of general nature or an ‘educated guess’.  In the cases where the documents or supporting evidence are known to the informant but are not in the possession, the informant should describe these documents and identify their location to the best of his ability.

The information is to given an undertaking as detailed below:

• That he is aware that the information or documents furnished by him do no ipso facto confer on him the right to any reward that he would be bound by the decision of the competent authority in this regard;
• That he is aware that the extend of reward depends on the precision of the information and the usefulness of the documents furnished by him;
• That the reward would pertain only to as much of the taxes recovered/realized as are directly attributable to the information supplied by him;
• That the provisions of Section 182 of the Indian Penal Code have been read by him or explained to him and he is aware that if the information furnished by him is found to be false he would be liable to prosecution;
• That he accepts that the Government is under no obligation to enter into any correspondence regarding the details of any taxes realized as a result of his information; and
• That he accepts that payment of reward ex-gratia in the absolute discretion of the authority competent to grant rewards and he has no right to dispute to the correctness of the decision in court of law.
• The information can be submitted to the jurisdictional Pr.CCIT/CCIT/Pr.CIT of the assessee as mentioned vide publication of his name in public domain or in the office of any other Pr. CCIT/CCIT to the officers designated as nodal officers (not below the rank of Addl/Jt. CIT) for  receiving the information.  

Prohibition of reward

No reward shall be granted if,-

• The informant is a Government servant who furnishes information or evidence obtained by him in the course of his normal duties as a Government Servant;
• The informant is required by law to disclose the information to the Department; or
• The informant has access to the information on the basis of a contract with the Government;
• The Scheme should be confined to only cases where-

• Assessee is not traceable;
• There are no/inadequate assets for recovery;
• Self assessment tax is outstanding for more than 6 months;
• TDS has been deducted but not deposited for more than 6 months

and their names have been published in public domain under Section 287 of the Income Tax Act, 1961.

Process of reward

The jurisdictional Pr.CIT will be act as the Nodal Authority to examine and decide the nature of actionable information.  Information received by any other Pr. CCIT/CCIT will be forwarded within 15 days to the jurisdictional Pr.CCIT/CCIT.

Where any information is furnished the informant will be required to furnish a written statement duly signed by the informant in the presence of the Nodal Officer, to whom the information is furnished.   If the information is received by post intimating that the information is given, the information should appear before and sign the written statement in the presence of such authority.  If the written statement is not given the reward shall not be awarded.

Reward should be processed and granted in respect of recoveries directly attributable to the information furnished by the informant which was not in the knowledge of the department.   Any proposal to this effect must be mooted after recoveries have been made of irrecoverable taxes and there is no further litigation.   Reward will be only with reference to taxes recovered in the case of a tax payer about whom information is given.

Reward is discretionary subject to these guidelines.  No representation or petition against any decision regarding grant of rewards will be entertained from either the informant or any person on his behalf and the outcome of the claim cannot be disputed in court.

The authority competent to grant reward will be the Pr. Chief Commissioner of Income Tax/Chief Commissioner of Income tax in whose charge the arrears, from which recovery is made, are recorded.  However where the amount of reward in any given case exceeds ₹ 1,00,000/- the same should be approved by a Committee of three officers comprising the Pr. Chief Commissioner of the region as Chief Commissioner concerned and one other CIT nominated by the Pr. CCIT.   In case Pr. CCIT is also the Chief Commissioner he shall nominate one more Chief Commissioner as member of the Committee. 

 In determining the reward amount the authority competent to grant the reward will keep the following:

• The accuracy of the information given by the informant;
• The extent and nature of the help rendered by the informant;
• The risk and trouble undertaken and the expense and odium incurred by the information in securing and furnishing the information and documents;
• The quantum of work involved in utilizing the information furnished and the facility with which such tax could be recovered as a result of the information;
• The quantum of reward already given in terms of Guidelines for Grant of rewards to Informants, 2007 where the proceeding or action for levy of tax was originally initiated on the basis of information provided by the same informant.

When the amount of reward is ₹ 1 lakh or more the Pr.CCIT or CCIT concerned shall, before the grant of reward, get the case checked and obtain a certificate from the concerned Pr. CIT, regarding the correctness of the taxes recovered.

The orders of the authority competent to grant reward in cases where such authority is himself competent to grant reward and in case in which the decision vests with the Committee sanction of the Committee will constitute sufficient authority for drawing the bill on the treasury against the sanctioned allocation.

Secrecy

The identity of the informant shall be kept secret if so desired by him by giving him a number.  No information relating to informants or the rewards paid to them shall be disclosed to any authority except in accordance with any law for the time being in force.

Not taking cognizance of information

The authority competent to obtain information, evidence or documents from informant will maintain record of each informant, giving in brief his antecedents, the details of cases in which he has furnished information and the extent to which information has been found reliable.  In case it is found that the antecedents of the information, the nature of the information furnished by him in the past and his conduct justify ignoring the information, evidence and documents furnished by him, the case should be referred by such to the Pr. CCIT/CCIT concerned, and if approved by him, it would be open for such authority not to take cognizance of the information furnished by such an informant.