Ahmedabad: Gujarat High Court dismissed a petition by an income tax informant seeking a higher reward after his inputs helped the department detect tax evasion by the Ahmedabad-based Sheladiya Group and recover Rs 8.12 crore. The court held that informant rewards are ex gratia and discretionary, and judicial interference is unwarranted unless there is manifest illegality or patent arbitrariness.With the ruling, the anonymous real estate consultant will have to remain satisfied with a total reward of Rs 17.51 lakh. A search conducted in 2010 had uncovered Rs 60.48 crore of undisclosed income and Rs 1.50 crore in cash from the construction firm.The informant had sought a reward of Rs 44.5 lakh, contending that the Central Board of Direct Taxes’ (CBDT) recommending authority had proposed payment of 5.48% of the realised tax amount in recognition of the value of his inputs.According to court records, the informant had tipped off the department in 2010 about a land transaction in which the Sheladiya Group allegedly paid Rs 47.5 crore in cash to a landowner. The subsequent investigation also brought other participants in the deal under the tax department’s scanner, resulting in a total tax recovery of Rs 8.12 crore.Initially, the department granted the informant Rs 15 lakh, stating that it was the applicable cap despite the reward policy permitting payment of up to 20% of the realised tax amount in eligible cases. Challenging the amount, the informant approached the high court in 2018, relying on the 2007 ministry of finance guidelines, which permit relaxation of the cap where tax recovery exceeds Rs 5 crore.Pursuant to an earlier direction of the court, the department reconsidered the claim, recalculated the reward and paid an additional Rs 2.51 lakh in Dec 2018, taking the total payout to Rs 17.51 lakh. However, the informant again approached the court seeking further enhancement, arguing that the recovery justified a higher reward.Opposing the plea, the department argued that rewards under the 2007 policy are ex gratia and entirely discretionary. It submitted that the Full Board had reassessed the claim in detail and found that only six of the 14 written information points furnished by the informant were accurate, resulting in a lower weightage and revised reward.The department also produced the undertaking signed by the informant before the search, acknowledging that any reward would be an ex gratia payment subject to the absolute discretion of the competent authority.Dismissing the petition, the bench of Justices A S Supehia and V D Nanavati observed, “Since the amount of reward is an ex gratia reward and is not governed by any statutory provisions and the petitioner has also filed an undertaking, this court cannot step into the shoes of the expert body like the CBDT and tinker with the amount arrived on a systematic calculation unless there is manifest illegality or the fixation of the amount of reward is premised on patent arbitrariness de hors the policy. Hence, we would not like to interfere with the final reward granted to the petitioner as determined by the Full Board.”
