Gujarat HC Directs Reconsideration of Informant’s Tax Reward Claim Under 2007 Guidelines

The petitioner had furnished information to the Income Tax Department alleging large-scale tax evasion by the Vasant Group of builders. The Department required the petitioner to submit a formal statement under the Guidelines for Grant of Rewards to Informants, 2007, which he duly did in the presence of competent authorities. An interim reward of Rs. 1,00,000 was paid to the petitioner. However, no final reward order was ever passed thereafter.

The Department took the stand that since reassessment did not result in any addition on the alleged issue, the petitioner was not entitled to any further reward beyond the interim amount. Aggrieved by the absence of a final decision by the competent committee, the petitioner approached the Hon’ble High Court.

Main Issue: Whether the Income Tax Department can deny further reward to an informant without a reasoned decision by the competent committee under the 2007 Reward Guidelines.

HC’s Decision: The Hon’ble High Court held that the Department cannot avoid passing a final, reasoned order under the Reward Guidelines merely by stating that no further reward is payable.

Relying on the Supreme Court judgment in Ketan Kantilal Modi v. Union of India, the Court emphasized that the committee constituted under Clause 2.1 of the 2007 Guidelines must apply its mind and take a formal decision after granting an opportunity of hearing to the informant.

The Court directed the competent committee to hear the petitioner and decide whether any enhancement of reward is warranted or whether the interim reward of Rs. 1,00,000 itself constitutes the final reward. The Court clarified that it expressed no opinion on the quantum of reward.

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