The cash reward scheme for officers of the Investigating Wing of the Income Tax Department is bad in law and ultra vires the Constitution, the Kolkata Bench of the Central Administrative Tribunal has held.
A Bench consisting of K.V. Sachidanandan, Vice-Chairman, and Champak Chatterjee, Administrative Member, quashed the scheme introduced by a Central Board of Direct Taxes Circular, dated November 6, 1985, to the officers per case of detection of tax evasion.
The Tribunal said: “Tax evasion is not a new phenomenon, and the propensity to evade payment or under-payment of tax is common all over the world. It has existed since the taxing system was introduced in our country long long ago. For detection of any unaccounted money which is commonly known as ‘black money,’ the Income Tax Department is equipped with competent officers, who undertake search and seizure operations either on their own initiative or on receipt of information or tip-offs from informers or sources.”
The Bench said: “Such government officials are performing their official duties, for which they are paid an appropriate pay and allowances as prescribed under the rules, and such duties are also conditions of their service. In such circumstances, payment of reward per case of detection of unlawful evasion of tax is wholly unwarranted and uncalled for.
“Payment of reward to outsiders who act as a source or informer can be understood, as they stand on a different pedestal, but it is not understood why payment of reward/commission is to be made to the government officials over and above their monthly salary for performing their prescribed statutory duties? That too without liability to pay income tax, though it is their income. Why this benevolence?”
In the instant case, Samir K. Ghosh, who retired as Additional Commissioner of Income Tax, Kolkata, claimed Rs.7,46,320 as a cash reward during 1992-96 with respect to six cases, as against Rs. 2,80,244 paid to him.
The Tribunal rejected the plea, saying it would be open to the government if it so desired to explore an alternative means of recognising commendable work done by officials.