Instructions relating to Search & Seizure
Date of Issue: 30.11.1993
Subject : Guidance for Grant Of Rewards To Informants, 1993

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
GUIDELINES
FOR GRANT OF REWARDS TO INFORMANTS, 1993
In suppression of the existing guidelines on the subject, the following guidelines are hereby laid down for regulating the grant of rewards to informants in income-tax, wealth-tax, gift-tax and estate duty cases.

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   1.1.Short-title                    These guidelines may be called the 
                                      Guidelines for grant of Rewards to
                                      Informants, 1993
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   1.2.Commencement and application   Subject to the provisions of
                                      Paragraph 2.4 these guidelines 
                                      will regulate the grant and
                                      payment of reward to informants in
                                      cases where  information is
                                      received on or after the 1st
                                      December, 1993.
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   2.1.Authorities Competent          The authority competent to grant
   to grant rewards                   rewards Authorities of Income-
                                      tax/Director of Income-Tax (Inv.)
                                      / Director of Income-tax to grant                  
                                      (Recovery) depending on the
                                      authority to whom the information
                                      on rewards the basis of which
                                      appropriate action has been taken,
                                      was furnished. Provided that where
                                      the amount of reward including
                                      reward if any already granted, in
                                      any given case exceeds Rs.
                                      1,00,000 but does not exceed Rs.
                                      5,00,000 (Rs. Five lacs only) no 
                                      reward shall be granted by the
                                      Director of Income-tax or as the
                                      case may be the CIT , except with
                                      the previous approval of a
                                      committee consisting of
                                      1) Director General of Income-tax
                                      Inv.) of the zone concerned
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                                      (2) Chief commissioner of the
                                       region concerned and
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                                      (3) Commissioner of Income-tax
                                       concerned or Director of
                                       Investigation concerned as
                                       nominated by DGIT(Inv.) Provided
                                       further that the approval of the
                                       full Board will be required
                                       if the total reward, including
                                       reward if any already granted, if
                                       any given case exceeds
                                       Rs. 5,00,000(Rs. Five lacs only)
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N.B. For the purpose of this sub-para, reward includes interim reward, part of final reward, reward on adhoc basis, and reward in cases where the information leads to recovery of irrecoverable taxes.

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   2.2. Proceedings before             In a case where the approval of
   the Board referred to CBDT          the Committee referred to in the
   in the first proviso to para2.1     first proviso to para 2.1 is
                                       required the matter shall be
                                       referred by the Committee
                                       concerned Director of Income-tax
                                       or as the case may be, the
                                       referred to in concerned
                                       Commissioner of Income-tax
                                       to the DG(Inv.) of the zone the
                                       first concerned who shall convene
                                       the Committee and convey its
                                       decision proviso to the authority
                                       which had made the reference.
                                       para 2.1
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   2.3.Proceedings before the Board    In a case where the sanction of
   referred to  CBDT in the second     the Board referred to in the proviso to para2.1                                      second proviso to para 2.1 in
                                       required, the matter shall be referred by the
                                       concerned DGIT(Inv.) to Member(Inv.)
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   2.4.Applicablity of certain         With effect from the 1st
   procedures to the case covered      December, 1993 the procedure of
   by the earlier guidelines           mentioned in paragraphs 2.1, 2.2
   for reward                         and 2.3 shall mutates mutandis 
                                       apply to pending cases of reward
                                       where information was furnished
                                       prior to the 1st December,1993
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   3.Informant for the  purpose        A person will be considered to be
   of the guidelines(see also Para 4)  an informant eligible for  reward
                                       in accordance with these
                                       guidelines if he furnishes
                                       specific information, of
                                       undisclosed income, wealth, gift,
                                       estate. Provided      that the claim
                                       of reward shall be confined to
                                       cases where action is actually
                                       taken in pursuance of the
                                       information. It will not be
                                       extended to cases where voluntary
                                       returns admitting additional
                                       income/wealth/gift/estate is
                                       filed subsequent to the receipt
                                       of the information but before any
                                       action on the basis of
                                       information has been taken.
  
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   4. Reward in cases where the        The informant will also be
   information leads to recovery       eligible for reward if the
   of irrecoverable taxes etc.         information furnished by him
                                       leads to the recovery of taxes /
                                       penalties / interest which have
                                       already been levied and which
                                       might not be recovered but for
                                       the information supplied.
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   5. Prohibition of rewarding           5. Prohibition of No reward shall  
   Government Servants in              be granted under these guidelines
   Certain cases                            to a Government servant who 
                                       furnishes information or evidence
                                       obtained by him in  the course of
                                       his normal duties as a Government
                                       Servant.
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   Explanation:-                       For the purposes or para 5, a
                                       person employed as an employee by
                                       the Central or any state or any
                                       Union Territory Government or a
                                       nationalised bank or any local
                                       authority or any public sector
                                       undertaking, corporation, body,
                                       corporate or establishment, set
                                       up or owned by the Central
                                       Government or any State
                                       Government or any Union Territory
                                       Government or any state            
                                       Government or any Union Territory
                                       Administration shall be deemed to
                                       be a Government servant.
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   6.Nature of reward and              Reward in accordance with these
   prohibition the entertainment       guidelines will be ex-grantia for
   of representations                 payment which subject to these 
                                       guidelines will be granted in
                                       absolute discretion of the
                                       authority competent to grant
                                       rewards. No representation or
                                       petition against any decision
                                       regarding grant of rewards will
                                       be entertained from either the
                                       informant or any person or his
                                       behalf
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   7.Assignment of reward not          As the reward under these
   to be recognised                   guidelines is in the nature of an
                                       ex-grantia payment, no assignment
                                       there of made by the informant
                                       will be recognised. The authority
                                       competent to grant reward may
                                       however, grant reward to heirs or
                                       nominees of an informant of an
                                       amount not exceeding the amount
                                       that would have been payable to
                                       the informant had he not died.
  
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   Statement of informant              Where any information or evidence
                                       is furnished by any person, in
                                       the expectation of a reward he
                                       will be required to furnish a
                                       written statement in the form
                                       annexed to these guidelines. Such
                                       a statement should be signed by
                                       informant in the presence of an
                                       officer not below the rank of an
                                       Income-tax Officer. Where any
                                       information is received by post
                                       intimating that the information
                                       is given with a view to claim
                                       reward the informant should be
                                       asked to appear before an income-
                                       tax authority not below the rank
                                       of an income-tax officer, and
                                       sign the written statement in the
                                       presence of such authority. The
                                       original statement in all cases
                                       should be kept in the custody of
                                       the DG(Inv.)/DI(Inv.)/CIT.
                                       Provided that no reward shall be
                                       admissible if the informant
                                       refuses to give the written
                                       statement as referred to above.
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   9. Written under taking of the      At the time an informant
   informant                           furnishes, in the expectation of
                                       a reward, any information or 
                                       documents, an undertaking should         
                                       be taken from him to the effect:-
  
                                       that he is aware that the 
                                       information or documents 
                                       furnished by him do not ipso
                                       facto confer on him right to any
                                       reward and that he would be bound
                                       by the decision.
  
                                       That he is aware that the extent
                                       of reward depends on the                        
                                       precision of the information and
                                       usefulness of the documents
                                       furnished.
  
                                       That the reward would pertain
                                       only to as much as the extra
                                       taxes levied/realised as are
                                       directly attributable to the
                                       information supplied by him.
  
                                       That the provisions of sanction
                                       182 of the Indian Penal Code have
                                       been read by him or explained to
                                       him and he is aware that if the
                                       information furnished by him is
                                       found to be false he would be
                                       liable to prosecution.
  
                                       That he accepts that the
                                       Government is under no obligation
                                       to enter into any correspondence
                                       regarding the details of
                                       additions made and taxes released
                                       as a result of his information
                                       and;
  
                                       That he accepts that payment of
                                       reward is ex.gratia in the
                                       absolute discretion of the
                                       authority competent to grant
                                       rewards and he has no right to
                                       dispute the correctness of the
                                       decision in any court of law.
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   10.Secrecy of the identify          The identify of the informants
   of the informant                   shall be kept secret by
                                       invariably giving them a code
                                       number. No information relating
                                       to informants or the rewards paid
                                       to them shall be disclosed to any
                                       authority, except in accordance
                                       with any law for the time being
                                       in force
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   11.Circumstances to be kept         In determining the reward which
   in mind in determining              may be granted, the authority
   the amount of reward                       competent to grant the reward
                                       will keep in mind the following 
                                       circumstances:
  
                                       The accuracy of the information
                                       given by the informant.
  
                                       The extent and nature of the help
                                       rendered by the informant.
  
                                       The risk and trouble undertaken
                                       and the expense and odium
                                       incurred by the informant in
                                       securing and furnishing the
                                       information and documents.
  
                                       The quantum of work involved in
                                       utilising the information
                                       furnished and in making the        
                                       assessment;
  
                                       The quantum of extra taxes levied
                                       the actually realised or
                                       realisable which are directly
                                       attributable to the information
                                       and document supplied by the
                                       informant. It is clarified that
                                       the quantum of extra taxes
                                       realisable will be determined
                                       only after all the assessments
                                       have become final and no appeal
                                       etc. is pending or filed or the
                                       time for filing of appeal has
                                       expired.
  
                                       In cases where theinformation led
                                       to recovery or otherwise
                                       irrecoverable taxes, the facility 
                                       with which such taxes could be
                                       recovered as a result of the
                                       information.
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   11.2 Certificate from the           When the amount or reward,
   Internal Audit                      including reward if any Party
                                       already granted is Rs. 1 lac or
                                       more the CIT/DIT shall, before
                                       the grant of reward, get the case
                                       checked by the Internal Audit
                                       Party and obtain a certificate
                                       regarding the correctness of the               
                                       extra tax levied recovered.
  
                                       N.B. For the purpose of this sub-   
                                       para, reward includes final
                                       reward, part of final reward and
                                       reward in cases where the
                                       information leads to recovery of
                                       irrecoverable taxes but does not
                                       include interim or ad-hoc reward.
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   12.Prohibition of granting reward   No reward should be granted if
   in cases of vague information etc.  the information furnished is of a
                                       vague and general nature Reward
                                       should not be granted in respect
                                       of any incidental benefits which
                                       may arise to revenue in other
                                       cases as a result of the
                                       information furnished by the
                                       informant.
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   13.Amount of reward                The Authority Competent to grant
                                       reward may grant reward not
                                       exceeding 10% (Ten percent) of
                                       the extra income-tax, wealth-tax,
                                       gift-tax and estate duty levied
                                       and actually realised, but
                                       subject to a ceiling of Rs.
                                       5,00,000/- (Rupees Five lacs
                                       only) if the aforesaid taxes are
                                       directly attributable to the
                                       information, including documents,
                                       supplied by the informant.
  
                                       Provided that the aforesaid
                                       monetary limit of Rs. 5,00,000/-
                                       subject to however the ceiling
                                       limit of 10% of the extra income-
                                       tax, wealth-tax, gift-tax, estate
                                       duty levied and actually realised
                                       can be waived in suitable cases
                                       after obtaining the approval of
                                       the full Board.
  
  
                                       N.B. In cases where tax is being
                                       paid by the assessee in
                                       instalments after the assessments
                                       becoming final, the authority
                                       competent to grant reward may
                                       consider disbursement of reward
                                       in instalment.
  
                                       Explanation:
  
                                       The monetary ceiling of
                                       Rs.5,00,000/- (Rupees five lakhs
                                       only) referred to in para 13.1
                                       shall apply with reference to a
                                       group of cases and not in respect
                                       of the individual assessees of
                                       the group
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   13.2 Part of Final reward           The authority competent to grant
                                       reward may grant a part of final
                                       reward in cases where only some
                                       of the assessments relating to a
                                       case have become final after
                                       decision in appeals etc. or where
                                       some of the issues in an
                                       assessment have become final
                                       after decision in appeal etc. and
                                       the authority competent to grant
                                       reward is satisfied that extra
                                       taxes attributable to such
                                       assessment or such issues, which
                                       have been levied and realised
                                       will not reduced under any
                                       proceeding at any time.
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   13.3 Amount of part of              The amount of part of final
   final reward                        reward in a case will be
                                       determined in relation to the
                                       relevant assessment years in the
                                       manner prescribed in Para 13.1
                                       Reward, if any, already granted
                                       shall be deducted from the amount
                                       of part of final reward
                                       determined under paragraphs 13.2.
                                       A part of final reward granted as
                                       above shall be deducted from the
                                       final reward that may be granted
                                       to the informant.
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   14. Reward on ad-hoc basis in       The reward should ordinarily
   certain cases                       be determined in accordance   
                                       with the provisions of paragraph-
                                       13, but the authority competent
                                       to grant rewards may determine
                                       the reward on ad-hoc basis in the
                                       following types of cases, subject
                                       to the condition that the reward
                                       should not exceed the limits
                                       mentioned in para 13:-
     
                                       Cases where information or
                                       documents have been furnished in
                                       respect of `Havalawalas' and the
                                       gain to revenue in the case of
                                       `Havalawalas' is negligible but
                                       substantial in the cases of
                                       beneficiaries of the `Havalas'
                                       and it is not possible without 
                                       inordinate delay to assess the
                                       extra taxes realisable in the
                                       cases of the said beneficiaries;
  
                                       Cases involving carry forward of
                                       large losses or unabsorbed
                                       depreciation if the information
                                       or documents furnished only help
                                       in reducing the said losses
                                       and/or unabsorbed depreciation
                                       and it is not possible to
                                       determine immediately the extra
                                       tax that could have been             
                                       realised;
  
                                       Cases where information has been
                                       furnished by more than one
                                       informant and it is difficult to
                                       quantify the extra taxes that       
                                       could have been realised as a
                                       result of the information
                                       furnished by each of them.
  
                                       Other cases where the authority
                                       competent to grant reward
                                       considers it necessary or
                                       expedient to pay reward on ad-hoc
                                       basis. Such cases will however be
                                       referred by the authority
                                       competent to grant rewards to the
                                       Central Board of Direct Taxes for
                                       final determination of the basis
                                       and quantum of reward.
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   15.1 Interim reward                The authority competent to grant
                                       rewards may grant an interim
                                       reward not exceeding 5% (five per
                                       cent) of the extra tax levied or
                                       which can reasonably be expected
                                       to be levied but subject to a
                                       ceiling of Rs. 1,00,000/- to an
                                       informant in a case where he is
                                       satisfied that:
                                       the information, evidence or
                                       documents given by the informant
                                       are likely to lead to substantial
                                       gain to Revenue;
                                       The assessment made, or to be
                                       made on the basis of such
                                       information/evidence or documents
                                       is likely to be sustained in
                                       appeal; andThe taxes assessed, or
                                       to be assessed on the basis of
                                       the information are likely to be
                                       recovered.
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   15.2 Applicability of the monetary  The monetary ceiling of Rs.
   ceiling for interim rewards         1,00,000/- (Rs.One lac only)    
   concept of a case                  referred to in para 15.1 shall
                                       apply with reference to a group
                                       of cases and not in respect of
                                       the individual assesses of the 
                                       group
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   15.3 Monetary limit for Interim     Monetary limit of Rs. 1,00,000/-
   reward not to Apply in certain      referred in para 15.1 can be
   cases                               waived in suitable cases after
                                       obtaining the approval of the
                                       full Board.
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   15.4                                Reward if any already granted
                                       shall be deducted from the amount
                                       of interim reward, determined
                                       under para 15.1 and 15.3.
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   15.5                                An interim reward granted under
                                       para 15.1 will be deducted from
                                       the final reward, or part of the
                                       final reward, that may be granted
                                       to the informant.
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   16.1 Reward in cases where          The authority competent to grant
   information furnished by            reward may grant a final reward
   an informant to another             under para 13.1 or a part of
   Govt. Deptt. is passed on by that   final reward under para  13.2 or
   Deptt to the IT Deptt.              a reward on ad-hoc basis under
                                       paragraph 14 or an interim reward
                                       under para 15.1 or 15.3 to an
                                       informant in a case where the
                                       information furnished by such an
                                       interment to a Government
                                       Department other than the Income-
                                       Tax Department was received by
                                       the Income-Tax Department from
                                       the Government Department.
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   16.2                                In a case referred to in
                                       paragraph 16.1 above, reward as
                                       is admissible under these
                                       guidelines may be granted might
                                       have received or is likely to
                                       received from the other
                                       Government Department to whom he
                                       had furnished the said
                                       information.
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   16.3                                The authority competent to grant
                                       reward shall disburse the amount
                                       of reward granted in accordance
                                       with the paragraphs 16.1 & 16.2
                                       through the Head of the
                                       Department who passed on the
                                       information to the Income-tax
                                       Department.
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   Maintenance of record of each       The Authority competent to obtain
   informant and not taking            information evidence or documents 
   cognisance of information           from informant will maintain 
   furnished by certain informant      record of each informant giving 
                                       in brief his antecedents, the
                                       details of cases in which he has
                                       furnished information and the
                                       extent to which information has
                                       been found reliable. In case it
                                       is found that the antecedents of
                                       the informant, the nature of the
                                       information furnished by him in
                                       the past and his conduct justify
                                       ignoring the information,
                                       evidence and documents furnished
                                       by him, the case should be
                                       referred by such authority to the
                                       CBDT, and if approved by the
                                       Board, it would be open to such
                                       authority not to take cognizance
                                       of the information furnished by
                                       such an informant.
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   18. Drawing of the Bill             The orders of the authority
                                       competent to grant reward in
                                       cases where it is the authority
                                       competent to grant reward and in
                                       cases to which the first and
                                       second provisos to para 2.1 are
                                       applicable, sanction of the
                                       Committee/full Board referred to
                                       therein, will constitute
                                       sufficient authority for drawing
                                       the bill on the treasury against
                                       the sanctioned allocation.
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   19. Control and audit expenditure   The control and audit of the
   relating to rewards.                       expenditure to reward will be
                                       governed by the instructions
                                       specifically issued for the 
                                       purpose from time to time
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Sd/-
Nishi Singh
Officer On Special Duty(IT- INV.III)
ANNEXURE
FORM OF STATEMENT FOR FURNISHING INFORMATION REGARDING INCOME/GIFT/WEALTH/ESTATE NOT DISCLOSED TO THE INCOME TAX/WEALTH TAX/GIFT/ESTATE DUTY DEPARTMENT
1. Full Name of the informant
(in block capital letters)
2. Full address of the informant
3. Name of person/persons in respect
of whom the information is furnished
4. Address of person/persons in respect
of whom the information is furnished
5. Full particulars of :-
(a) nature, source and extent of undisclosed
income/wealth/gift/Estate
(b) nature, location and estimated
value of undisclosed assets;
(c) method of concealment;
(d) period to which the concealment relates
6. Particulars of documents furnished, if any
(a) in original
(b) copy only
7. Source of information:-
(a) Whether the information has been acquired personally in the
Capacity of an employee, relation or partner etc., of the person
Mention at (3) above
(b) Whether information has been acquired through some other
Person, if so, his connection with the person at (3) above
* The Information furnished should be reliable, definite and precise, and full to the extent known to the informant, if the space available here is not found sufficient additional sheet may be attached.
8. Declaration:-
I declare that
(a) I am aware that the information or document furnished by me do not ipso facto confer on me a right to any reward, and that I would be sound by any decision and authority competent to grant rewards may take.
(b) I am aware that the extent of the reward depends on the precision of the information and usefulness of the documents furnished by me.
(c) I am aware that the reward would pertain only to as much of the extra taxes levied/ realised as are directly attributable to the information supplied by me.
(d) The provisions of section 182 of the Indian Penal Code have been read by me or explained to me and I am aware that if the information furnished by me is found to false I would be liable to prosecution.
(e) I accept that the Government is under no obligation to enter into any correspondence regarding the details of additions made and taxes realised as a result of my information.
(f) I accept that payment of reward is ex-gratia in the absolute discretion of the authority competent to grant reward and I have no right to dispute the correctness of the decision in any court of law.
(g) In the event of may death before the reward is paid to me, it may be paid to ________________________________.

                                         Signature of the informant
                                         Informant's No., if any.
Signature of the officer
before whom the statement
is signed

Designation of the officer
Date :
Place:
Proposal for granting of interim reward/part of final reward /final reward (see provisos below paragraph 2.1 of the Guidelines for grant of rewards to informants, 1993
1. Name of the case in which information was furnished by the informant (s)
2. Applicable Guidelines for the computation and grant of reward
4 (a)(b) Brief description of the information / documents / evidence furnished by the informant(s)Action taken on the information indicating the date and the outcome. Clarify the extent to which the result of the action taken is attributable to the information furnished
5.(a)(b) Whether a written statement under the relevant Guidelines was furnished by the informant(s)Whether a written undertaking referred to in the relevant Guidelines was furnished by the informant(s)
6 Amount of reward recommended for which approval is sought(a) Total amount of reward recommended including reward already Granted / sanctioned in the past(b) Amount out of (a) which has already been sanctioned/paid to the Informant(s)(i) Interim reward(ii) Ad-hoc reward(iii) Part of final reward(iv) Total of (i) to (iii)(b) Net amount of further reward now recommended (a) (b) (iv) Interim rewardAd-hoc reward Part of final reward Final Reward(c) If there are more than one informant the ratio in which the reward is proposed to be distributed amongst them.
7. If any of the rewards referred to in S.No. 6(b) was granted with the approval of Board/Committee, enclosed a copy of the letter of approval
8. (a) Basis for computation of reward indicating the para no. of the applicable Guidelines, the extra tax levied and realised which is attributable to the information furnished, percentage of extra tax proposed as reward.
(b) If the reward recommended exceeds the prescribed monetary limit, reasons for recommending higher amount of reward.
9. (a) Whether all the assessment have become final (in case of pendency of appeals, etc., give details)(b) Whether extra tax levied and realised is directly attributable to the information / documents evidence furnished by the informant(s)(c)Whether the authority recommending reward as compared the information furnished with the assessments/extra taxes levied and realised and is satisfied that the information furnished justifies the amount of reward recommended.(d) Whether the circumstances referred to in para 11.1 of the 1993 Guidelines or relevant paras of earlier guidelines or relevant paras of earlier guidelines as the case may be, have been kept in view while recommending the reward.
10. Whether the case has been checked by Internal Audit Party. If yes,enclose certificate of IAP regarding correctness of extra tax levied and realised
11. (a) Whether information in this case was received by the Income-tax Department from any other Government Department(b) If so whether any reward is payable to the informant(s) who furnished information to the other Government Department(State reasons)
12. Whether the informant is a government servant. If so, whether the information was furnished by him in the course of his normal duty as a government servant.
Submitted to the Director General (Investigation) in duplicate in accordance with paragraph 2.2/2.3 of the Guidelines for Grant of Rewards to Informants, 1993.
Encls: As above

                                                     Signature:
                                                     Date:
                                                     Name :
                                          Designation