Court Dismisses Petition for Increased Reward, Citing Lack of Arbitrariness or Illegality
In a significant ruling, the Gujarat High Court has dismissed a petition filed by an informant seeking an increased reward from the Central Board of Direct Taxes (CBDT) under the Guidelines for Grant of Rewards to Informants, 2007. The petitioner, identified as ABC, had challenged the amount of Rs.17,51,484 awarded to them, arguing for a higher reward based on their contribution to tax recovery.
The Division Bench, comprising Justices A.S. Supehia and Vaibhavi D. Nanavati, delivered the judgment on June 16, 2026, in response to R/Special Civil Application No. 12632 of 2019. The petitioner, represented by Advocate Mr. Jit P. Patel, contended that the reward should reflect the recommending authority's initial suggestion of Rs.44,55,000, calculated as 5.48% of the recovered tax amounting to Rs.8.12 crores.
The case arose from information provided by the petitioner, a Real Estate Consultant, about tax evasion by the SHELADIA group. This led to a raid on December 14, 2010, resulting in a disclosure of Rs.60.48 crores and the seizure of Rs.1.5 crores in cash. Initially, the petitioner received Rs.1,00,000 as an interim reward, followed by Rs.14,00,000, and later an additional Rs.2,51,484, after reassessment by the CBDT.
Senior Standing Counsel Mr. Varun K. Patel, representing the CBDT, argued that the reward determination involved expert discretion and adhered to the guidelines. The court noted that the CBDT had thoroughly re-evaluated the case, considering the recovery details and applying the guidelines, which allowed discretion in reward amounts, especially when additional tax collections exceeded Rs.5 crore.
The judgment emphasized that the reward was ex-gratia, highlighting that the petitioner had signed an undertaking acknowledging the discretionary nature of the payment and forfeiting any right to dispute it legally. The court underscored the importance of expert discretion in such cases, stating it would not substitute its opinion unless there was clear evidence of illegality or arbitrariness.
Citing a Supreme Court precedent, the court reaffirmed that the petitioner could not claim a statutory right to a specific reward amount. The bench concluded by dismissing the petition, affirming the CBDT's decision and methodology in determining the reward.
Bottom line:-
Informant's reward under CBDT guidelines - Payment of reward is ex-gratia and at the discretion of competent authority - Court will not interfere unless there is manifest illegality or arbitrariness in determination of reward.
Statutory provision(s): Income Tax - Guidelines for Grant of Rewards to Informants, 2007, Clause 13.1
ABC v. Union of India, (Gujarat)(DB) : Law Finder Doc id # 2929931
