Delhi HC denies informant reward claim as tax violation information was already disclosed in assessment proceedings

Delhi HC dismissed petitioner's claim for reward under Income Tax Informants Reward Scheme, 2018. Court held that information regarding cash deposits and violations of Sections 269SS and 269T was already disclosed in assessment proceedings and examined by AO. The information provided did not constitute undisclosed income or wealth, nor did it lead to detection of substantial tax evasion as required under the scheme. Since the information was already available to tax authorities and reflected in books of account, petitioner failed to meet eligibility criteria for informant reward.

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Issues Involved:

1. Whether the petitioner qualifies as an "informant" under the Income Tax Informants Reward Scheme, 2018.
2. Whether the information provided by the petitioner led to the detection of substantial tax evasion, thereby entitling him to a reward.
3. Whether the petitioner's information constituted "undisclosed income and wealth" under the 2007 Guidelines.

Issue-wise Detailed Analysis:

1. Qualification as an "Informant" under the 2018 Scheme:

The petitioner sought recognition as an "informant" under the Income Tax Informants Reward Scheme, 2018, following his submission of information regarding alleged tax evasion by a cooperative society. The respondents rejected this request, citing Clause 8 of the 2018 Scheme, which outlines circumstances where no reward shall be granted. Specifically, the petitioner's case was found lacking under sub-clauses (i), (vi), and (viii), which pertain to the information not being provided in accordance with the Scheme, not being received directly from the informant, and being shared with unauthorized entities. The court noted that the petitioner did not formally challenge this rejection in the writ petition, but due to his pro se status, this technicality was not held against him.

2. Detection of Substantial Tax Evasion:

The 2018 Scheme mandates that for an informant to be rewarded, the information must lead to the detection of substantial tax evasion. The petitioner alleged that the cooperative society had engaged in substantial cash transactions, which were purportedly in violation of Sections 269SS and 269T of the Income Tax Act, 1961. However, the court found that these transactions were already disclosed and scrutinized during the assessment proceedings. The Tribunal had previously ruled that the penalties imposed for these transactions were not sustainable, as the transactions were genuine and did not constitute undisclosed income. Consequently, the court concluded that the information provided by the petitioner did not lead to the detection of substantial tax evasion, as required by the 2018 Scheme.

3. Information as "Undisclosed Income and Wealth" under the 2007 Guidelines:

At the time the petitioner initially provided information, the 2007 Guidelines were in effect, which required informants to furnish specific information of undisclosed income and wealth. The court noted that the cash deposits and repayments were clearly documented in the cooperative society's books and were addressed in the assessment proceedings. Therefore, the information could not be classified as "undisclosed income and wealth." The court emphasized that the material provided by the petitioner was already known to the respondents and did not reveal any new or undisclosed income. This finding was consistent with the Tribunal's decision, which dispelled any allegations of undisclosed income and tax evasion.

Conclusion:

The court found no merit in the writ petition and dismissed it, concluding that the petitioner did not qualify for a reward under the 2018 Scheme, as the information provided did not lead to the detection of substantial tax evasion or constitute undisclosed income under the 2007 Guidelines.

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