Shri Mansinh Hansraj Khatau vs Union Of India (Uoi), The Director ...
2007 Latest Caselaw 842 Bom

JUDGMENT

Anoop V. Mohta, J.

1. The plaintiff was an income tax practitioner, now retired.

2. In the first week of November, 1964 defendant No. 1 through its officer Mr. J.P. Singh, the Chairman of the Central Board of Direct Taxes, New Delhi made an announcement in a press conference which was published in various news papers on 8th November, 1964 to the effect that "the persons who discloses their concealed income voluntarily would be treated leniently and further; that the rate of reward to those furnishing information about concealed income has been stepped up from 2.5% to a minimum of 7.5% of the extra tax which would be generated as a result of such information and in suitable cases the reward might go upto 10%".

3. On 23/03/1973, first petition filed by the plaintiff providing information related to Pittie Family.

4. On 27/02/1974, second petition filed by the plaintiff providing information relating to Harinagar Sugar Mills Ltd.

5. On 11/03/1973, third petition filed by the plaintiff providing information relating to Pittie Family.

6. On 29/06/1974, fourth petition filed by the plaintiff providing information relating to M/s. Harinagar Sugar Mills Ltd.

7. On 25/07/1977, fifth petition filed by the plaintiff providing information relating to Mr. Raojibhai C. Patel.

8. On 28/07/1979, sixth to tenth (five) petitions filed by the plaintiff providing information relating to Members of erstwhile HUF of R.B. Narayanlal Bansilal Pittie.

9. On 01/06/1981, letter addressed by the plaintiff to defendant No. 3 clarifying that the plaintiff would be entitled to reward of 10% of the amount in tax plus penal interest realised by the Government.

10. On 30/07/1981, eleventh petition filed by the plaintiff providing information relating to members of erstwhile HUF of R.B. Narayanlal Bansilal Pittie.

11. There was no reply or response from the respondents, therefore, in the month of March, 1985, a suit instituted by the plaintiff against defendants for recovery of Rs. 5,00,000/- with interest thereon at 21% per annum and for other reliefs.

12. On 16/02/1989, written statement filed by the defendants.

13. On 12/03/1992, Notice of Motion No. 625 of 1992 taken out by the plaintiff for perjury against Mr. N.D.Joshi, Assistant Director of Income-tax and Mr. P.A. Prabhakaran, retired officer.

14. On 05/08/1992, affidavit in reply filed by Mr. N.D. Joshi.

15. On 07/08/1992, the Hon'ble Justice Mr. Variava was pleased to adjourn the Notice of Motion No. 625 of 1992 for recording of evidence along with hearing of the suit.

16. On 09/06/2005 issues were framed.

17. On 29/06/2006, the plaintiff filed an affidavit of examination-in-chief along with compilation of original documents. On 02/08/2006, an affidavit in lieu of examination-in-chief of defendants filed.

18. On 17/08/2006, cross-examination of plaintiff was recorded. On 05/10/2006, cross-examination of defendants was recorded.

19. The plaintiff has examined himself and produced documents to the evidence exhibit P1 to P37. The defendants have examined one Mr. Ritesh Parmar, Deputy Director of Income Tax (Investigation), but not produced any documentary evidence. Mr. Ritesh Parmar, was not the relevant officer at the relevant time and he had no personal knowledge about the matter in controversy.

20. Issues are as under:

1. Whether the plaintiff proves that on account of the information furnished by him to the defendants regarding concealed income/gains of the members of Pittie Family, M/s. Harinagar Sugar Mills Ltd. and the Legal heirs of Raoji C. Patel, he is entitled to get a reward from them?

2. Whether the Defendants prove that the sale of Shares of Hindustan Sugar Mills Ltd. was set aside by the High Court and the Shares were restored to the family members of Pittie family as stated in para-2 of the Written Statement?

3. Whether the defendants prove that from the dividend income of shares of Hindustan Sugar Mills Ltd., and upon deduction of interest payable to the Bank of India and other expenses in getting the sale of shares set aside thereby resulting in their been no surplus of dividend income as stated in para-3 of Written Statement?

4. Whether the defendants prove that the information given by the plaintiff in respect of Pittie family was already on their file and that the same was disclosed in their Income Tax Returns of the assesses as stated in para-3 of Written Statement?

5. If answer to Issues Nos. 2 to 4 are in the affirmative, whether defendants prove that no amount is payable to plaintiff as reward under the guide-lines of defendant as stated in para-4 of the Written Statement?

6. Whether the defendants prove that Petition dated 28/07/1979 of the plaintiff has not resulted in any gain to revenue as stated in para-4 of the Written Statement?

7. Whether the defendants prove that Assessment under F.P.T. for the assessment year 1943-44, 1944-45 has not become final in respect of Harinagar Sugar Mills as stated in para-5 of Written Statement?

8. Whether the defendants prove that the Assesses Harinagar Sugar Mills Ltd. had claimed Export losses and the same were allowed by I.T.O. as stated in para-5 of the Written Statement?

9. Whether the defendants prove that the Income Tax Officer had considered the claims of Plaintiff in respect of Assessment of the family members of R.B.Narayan Bansilal Pittie HUF and the information furnished by plaintiff was already with the defendants as stated in para-6 of the Written Statement?

10. Whether the defendants prove that the Income Tax Officer concerned had not reported any re-assessment of extra tax to M/s. Harinagar Sugar Mills Ltd. in view of information furnished by the Plaintiff as stated in para-7 of the Plaint?

11. Whether the defendants prove that the information furnished by the plaintiff by his Petition dated 23/03/1973 in respect of R.B.Narayan, Bansilal Pittie HUF was already supplied by the Assessee themselves on 13/12/1968 as mentioned in para-8 of the Written Statement?

12. Whether the defendants prove that in respect of Raoji C.Patel though the information furnished by the Plaintiff resulted in demand for extra Tax, the demand was unexecuted for the reasons stated in para-9 of the Written Statement?

13. Whether the defendants prove that the information furnished by the plaintiff in respect of all petitions connected with Pittie Family were baseless and incorrect and the Assessee themselves had furnished the information in their returns as stated in the Written Statement?

14. What reliefs/order?

21. Issue No. 1 : There is no dispute that defendant No.1 had announced and published such policy of rewarding to those who furnished the information about the concealed income.

22. There is no further dispute that the petitioner did supply information by 11 petitions, the information regarding concealed income/gains of the members of Pittie Family, M/s. Harinagar Sugar Mills Ltd. and the legal heirs of Raoji C. Patel. However, no guide-lines or instructions or circular issued by the Income-Tax Department under the Income Tax Act and Rules in this regard were placed on the record. The plaintiff's case, that on account of information furnished by him, he is entitled to get a reward from defendant No. 1 based upon the representation made and published in the various newspapers dated 8th November, 1964.

23. The learned Counsel appearing for the plaintiff has strongly relied on Narayan Chakrvorti v. Union of India 1980 Income Tax Reporter, Volume 126 (Calcutta), page 831 to support his case about the offer of reward as announced and published in the newspapers. A person who in response to such offer if supplies information the doctrine of promissory estoppel is applicable against the Government. Such suit against the Government is maintainable, based on contract Act 1970 (Section 70) r/w Section 106 and 114(g) of the Evidence Act-1872 and further that adverse inference be drawn against the department of the Government as they failed to furnish any information regarding the recovery of extra taxes, based on such information. In contrast to this, the learned Counsel appearing for defendant No. 1 has relied strongly on Volume 242 Income Tax Reports, 656 Motilal Kishangopal Thanvi v. Union of India (Bombay) whereby this Court on a basis of guide-lines framed by the Income-Tax Department governing grant of rewards to informant in 1987, held that the plaintiff had no locus to file such suit as it did not have any enforceable right based upon the executive instructions.

24. The Supreme Court in Union of India v. R. Padmanabhan while considering the subject of rewards to informants a government servants, based on guide-lines/circular issued by the Custom Department, after reviewing the existing policy and procedure under the provisions of Customs Act-1962, the Central Excises and Salt Act, 1944, the Gold (Control) Act, 1968 and the Foreign Exchange (Regulation) Act, 1973, in a writ petition under Article 226 of the Constitution of India, observed that "Reward is purely an ex gratia payment, subject to the guide-lines on the discretion of the Competent Authority, though it cannot arbitrarily be denied or refused at whim or fancy and it should specifically conform and must be shown to fall or be claimed within the four corners of the Scheme", "The award, being ex gratia payment, no right accrues to any sum as such till it is determined and awarded and, in such cases, normally it should not only be in terms of the guide-lines and policy, in force, as on the date of consideration and actual grant but has to be necessarily with reference to any indications contained in this regard in the scheme itself", "that apart, under the scheme final reward is postulated only on adjudication of the case resulting in confiscation of the goods as found stated in the guide-lines and that should be crucial and relevant date for consideration of award and, therefore, the guide-lines, as are in force on that date, will be really applicable and would be relevant." The Supreme Court, has, directed to make the payment of reward on merits of that matter.

25. In the present case, based on the newspaper publication and advertisements, the plaintiff is claiming the reward of Rs. 5,00,000/-. The defendants have specifically denied the generation of any extra revenue because of these so called information supplied by the plaintiff. Once, the plaintiff comes with a positive case and claimed for Rs. 5,00,000/- and in view of issue No. 1 and or even otherwise, burden lies upon the plaintiff to prove that the Department has generated about a crore rupees as averred and therefore, as per the announcement made in the newspaper, the plaintiff should have been rewarded.

26. There is no evidence laid by the plaintiff to prove that the Department has generated so much amount because of the information supplied by him. The plaintiff must prove his own case. The defendants' witness or their inability to place on record the relevant documents at the time of evidence would not be sufficient to grant the amount as prayed by the plaintiff. There is no question about adverse remarks of the department as contended by the learned Counsel appearing for the plaintiff, as the plaintiff himself is unable to justify his case of generation of the amount as averred. The plaintiff, therefore, failed to discharge his basic burden of proving his case specifically when there are positive averments made by the defendants' Department saying that there was no income generated because of alleged supply of information.

27. The plaintiff has been unable to prove the actual generation of aforesaid income except the averments made is not sufficient to shift the burden of proving the actual income upon the defendants. It is inconceivable under the facts and circumstances of the case that the defendants ought to have proved that on the basis of the alleged information supplied by the plaintiff, there was no additional revenue generated and that the information supplied by the plaintiff was already within their knowledge.

28. The another facet is that the first petition/information supplied in writing by the plaintiff is of dated 23/03/1973 for the assessment year 1964-65 of the Pittie Family. The announcement or publication as released by the defendants was of November, 1964. At that time the plaintiff was income-tax practitioner. The last petition/information was supplied on 30/07/1981. Based upon all these information supplied as per the plaintiff's annexure 1, the income-tax should have generated more than one crore. He also, therefore, claimed Rs. 5,00,000/-and prayed for directions against the defendants to render the account. As noted above, plaintiff unable to support his calculation and figures as mentioned. The plaintiffs cannot rely upon the evidence of defendants' Officer who had no personal knowledge, who joined the income-tax Department in the year 1997. The assessment as petitioner wants to revoke was from the year 1964 onwards. The evidence was laid in the year 1997. The evidence, therefore, just cannot be overlooked of the officer based on the information received from the record. The fact also cannot be overlooked that both the parties have laid the evidence in the matter.

29. The Court needs to assess the material available on record before passing any order. In the present case, I am of the opinion that the plaintiff failed to prove his burden and this case, by not producing the material in support of the figures so mentioned, specially when the plaintiff himself based upon the particular figure claimed Rs. 5,00,000/- towards the reward. Therefore, it is inconceivable that the plaintiff has no other information except the figures so arrived at. Putting the burden upon the department to produce the accounts by the parties to which the plaintiff has no concerned, is not acceptable, and specially when the department has denied the generation of income as contended the claim of the plaintiff, the case of plaintiff, therefore, in the facts and circumstances of the case, the suit needs to be dismissed on this ground itself. There is no question of proving negative.

30. The Supreme Court Judgment Union of India v. Motilal (Supra) just cannot be overlooked. Admittedly, no actual guide-lines has been produced either by the parties. The newspaper publication as contended cannot be the foundation of representation in such reward, as prayed. Assumed for a moment that there was such representation made but those representation even of respondent No. 1 could not have been made beyond the guide-lines published or announced at the relevant time. The plaintiff being income-tax practitioner for whatever may be the reason unable to produced any guide-lines based upon which he was claiming the reward of Rs. 5,00,000/-.

31. The department has not denied the representation and or the entitlement of reward if case is made out, but submitted vehemently that the department nowhere had generated any income out of those information. There was no letter or communication sent at any point of time by the department to the plaintiff about such reward. The suit is of the year 1985. The first application itself was made in the year 1973. Therefore, in absence of any communication, the presumption is always in favour of the department that they have not generated any income. The contention based on the judgment (supra) that the department is bound by the principle of promissory estoppel in reference to the representation made, in my view, in the facts and circumstances of the present case, is not acceptable. The facts are distinct and distinguishable. The reward as claimed, cannot be granted.

32. As observed by the Apex Court, such rewards are always based upon the guide-lines and rules and will always be granted at the discretion of the competent authority. There is no question of any legal right to claim such rewards unless the department actually generates the additional income or revenue. Such guide-lines though cannot be overlooked but still if there is no income generated as contended by the department and as in the present case the plaintiff unable to prove any generation of any additional revenue based upon such information. The discretion so exercised by the department based upon the material available needs to be represented. The Court in the present case cannot grant any relief to the plaintiffs as claimed.

33. In view of this, the issue No. 1 answered in negative.

34. Issue Nos. 2 to 14 : So far as the issue Nos. 2 to 14 are concerned, I am of the view that in view of the facts and circumstance of the present case, once the plaintiff failed to prove his case in view of issue No. 1, all other issues need no further discussion and as it became redundant. Even otherwise, considering the provisions of Order 14 Rule 5(2) CPC, I am of the view that issue Nos. 2 to 13 are framed wrongly and are unnecessarily and therefore, need to be struck down. In view of this issue Nos. 2 to 13 are struck down.

35. Resultantly, the suit is dismissed.

36. No costs.