Secretary, Central Board of Direct Taxes & Ors Vs. B. Shyam Sundar  Insc
436 (29 August 2001)
Bharucha, Y.K. Sabharwal & Ashok Bhan Y.K.Sabharwal,J.
Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government
of India announced a scheme to be operational from 1st April, 1985 for grant of reward to officers and staff of the Income Tax
Department. The scheme postulated the grant of reward under four heads as follows
Reward for disposal under Summary Assessment Scheme
Reward for scrutiny Wards
Reward for search and seizure work
Reward for best officers at Tribunal.
scheme sets out the quantum of reward, stage of its payment and persons
entitled to receive the award amount.
further stipulates that all cases of grant of reward would be examined and
approved by competent committees which were constituted. Rule 7 of the scheme,
inter alia, provides that the reward shall be payable to the Government
servants upto the level of Assistant Commissioner of Income Tax depending on
the contribution made by them as a team as well as individually with regard to
collection of intelligence, surveillance, effecting seizures and framing of
assessments etc. and due credit will be given to the staff employed in
investigation and/or prosecution work resulting in conviction of persons
involved. It further provides that the competent committee will decide the
manner in which the reward due will be shared between the eligible officers and
staff and that the reward will be purely an ex-gratia payment and the competent
committee's discretion shall be final.
respondent as an assessing officer completed the assessment of an assessee M/s.
Anand Samrat Company, Secunderabad for the assessment year 1983-84 by passing
assessment order dated 26/27th March, 1986 under Section 143(3) of the Income
Tax Act, 1961. In respect of this assessee and its partners, a search had been
carried out in July 1982 resulting in seizure of assets and number of
incriminating documents. It seems that after analyzing the seized material and
details gathered by the Intelligence Wing, an appraisal report was prepared by
the Assistant Director of Inspection (Investigation) and it was forwarded to
the assessing officer along with the seized material. On 6th May, 1985 a return was filed by the assessee
for the year 1983-84 which was the year relevant for the search action. The
respondent completed the assessment. The total additional income brought to tax
after giving effect to the order of the Income Tax Appellate Tribunal was over
Rs.12,00,000/-. According to the appellants, the additions made in the
assessment order were based on either the seized material or the report given
by the Investigation Wing.
reply to his claim for reward, the respondent was informed in terms of
communication dated 6th
April, 1995 that his
claim had been considered and he was not found fit for grant of reward under
Rule 2(b) of the Reward Scheme, 1985. This was challenged by the respondent by
filing before the Central Administrative Tribunal, Hyderabad an application under Section 14 of
the Administrative Tribunal Act, 1985. According to the respondent all the
conditions laid down in the scheme had been satisfied for grant of reward to
him under Rule 2(b) of the Reward Scheme, 1985 and denial thereof to him was
illegal and arbitrary.
stand of the appellants before the Tribunal was that payment under the scheme
was purely ex-gratia and the discretion of the Committee deciding the matter
was final and could not be questioned. On merits, it was submitted that the
respondent was not entitled to the grant of the reward under the scheme as the
assessment was made on the basis of documents and material seized in the search
operation by a team of officers and that was dealt with in Rule 2(c) of the
scheme and also that no contribution was made by the respondent. The respondent
was not a member of the team which had conducted search and seizure operation.
Tribunal, by order under challenge, allowed the application of the respondent
and directed the appellants to grant him the award as prayed by the respondent
in accordance with the scales prescribed by the department under the scheme.
objection that the discretion of the Committee that the respondent was not
entitled to the reward under the scheme could not be challenged before the
Tribunal, was rejected by the Tribunal holding that the reward was part and
parcel of service condition of an employee and it was a `remuneration' which
formed part of service matter and, therefore, the employee had right to
note that the learned counsel for the respondent frankly conceded that the
claim of the respondent for the reward under the scheme does not fall under
the respondent was not a member of the team which had conducted the search.
Counsel, however, contends that the claim of the respondent clearly falls under
Rule 2(b) and as all the conditions thereunder had been satisfied, the Tribunal
rightly allowed the application of the respondent. We do not agree. It has not
been shown to us how the discretion of the Committee can be said to be illegal
and arbitrary. It seems that the assessment was made on the basis of seized
material and appraisal report of the Investigation Wing and that the Committee,
whose discretion was final, was of the opinion that there was no contribution
made by the respondent and he was not found fit for grant of reward under Rule
2(b). Undoubtedly, the case came before the respondent as assessing officer
after search and seizure operation and if on these facts, the Committee decided
that the respondent is not entitled to the grant of reward, the discretion of
the Committee cannot be faulted.
the Tribunal's decision is wholly unsustainable.
on the question of jurisdiction it seems that the matter was outside the
purview of the Tribunal. Under Section 14 of the Administrative Tribunal Act,
1985, the Tribunal has jurisdiction, power and authority in relation to
`service matters'. `Service matters' include remuneration (including
allowances), pension and other retirement benefits. The reward amount was
purely ex-gratia payment.
difficult to treat it as a condition of service.
it is difficult to comprehend how such ex-gratia payment can be treated as
remuneration of the kind postulated by the Act. But in view of our decision on
merits, we do not consider it necessary to examine this aspect in depth.
view of aforesaid conclusions and also bearing in mind the submission of
learned Solicitor General that probably the scheme was withdrawn long back, we
refrain from commenting on the scheme which grants payment to Government
servants for doing their duty.
the foregoing reasons, we set aside the order of the Tribunal and allow the
appeal with costs.
Bhan) August 29, 2001.