Commissioner of Income Tax vs J.G. Gopinath

Sethuraman, J.—The respondent is an Income Tax Officer working as junior authorised representative in the Income Tax Appellate

Tribunal. As an Income Tax officer, he was in receipt of cash, a reward of Rs. 1,060, granted by the Central Government for his meritorious work

in discharging his public duties as an Income Tax Officer at the time of the voluntary disclosure scheme. The assessee claimed that this reward was

exempted u/s 10(17B) of the Income Tax Act, 1961. The Income Tax Officer disallowed the claim stating that there was no notification issued

under that provision exempting this reward from assessment. The Appellate Assistant Commissioner accepted the assessee''s claim and granted the

exemption. The Income Tax Officer took the matter on appeal to the Tribunal and the Tribunal agreed with the Appellate. Assistant Commissioner

in regard to the grant of exemption. It is this order of the Tribunal which was challenged by filing an application for reference which was dismissed,

and the matter has now been brought before this court u/s 256(2) of the Income Tax Act.

The following are the questions that are sought to be raised as question of law arising out of the Tribunal''s order :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the receipt of reward of Rs. 1,060

granted by the Central Government to the assessee was exempted u/s 10(17B) of the Income Tax Act, 1961?

Whether the Appellate Tribunal''s conclusion that the reward amount of Rs. 1,060 is not assessable to tax is justified and reasonable having

regard to the nature of the receipt of the award ?

We understand that the tax effect in this case is Rs. 1,060 and the Income Tax Officer who had to do his duties today, had to be present himself

in court for quite some time, because of the petition made u/s 256(2) of the Act. The work he discharges had to suffer to this extent. When such

cases are brought before this court the time of this court is taken up in such temporary matters. We find no merit at all in this petition.

Learned counsel appearing for the Commissioner did not contend that any notification as such was necessary for the purpose of grant of

exemption u/s 10(17B) though the Income Tax Officer said so in his order. Section 10(17B), in so far as it is relevant, runs as follows :

In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included : . .

.

(17B) any payment made, whether in cash or in kind, as a reward by the Central Government or any State Government for such purposes as may

be approved by the Central Government in this behalf in the public interest.

The relevant circumstances under which this reward came to be given have been extracted by the Tribunal in I. T. A. No. 1422 (Madras) of

1976-77, which is also the subject of another petition numbered as T. C. P. No. 366 of 1978, that extract is as under :

The Central Government (Ministry of Finance) sponsored a voluntary disclosure scheme under the provisions of the Voluntary Disclosure of

Income and Wealth Ordinance, 1975. By this Ordinance, the Government offered an unique opportunity to the public at large that any person who

wanted to disclose his black money or suppressed wealth, etc., could come forward with a clean breast under certain conditions. Such undisclosed

income or wealth would be assessed under a concessional rate without going into the details or the merits of the income or wealth. Besides this, the

person was also immune from penalty or prosecution. The object was to bring out the suppressed black money in the country to bring down

inflation in the market and also to give an opportunity to persons who were afraid to come forward to bring it out on account of high taxation

attended with severe consequences. This scheme was extremely successful, with the result that large unforeseen revenue flooded into the

exchequer. At the same time, it cannot be forgotten that the Income Tax wing of the Ministry had to work very hard with the already existing heavy

load carried on. In some quarters of the Department, the staff had to work round the clock particularly at the closure of the period declared in the

Ordinance. Appreciating this hard work and the extra output the Income Tax Department had shouldered, the Ministry came forward that the

special output turned out by the staff would not go unnoticed. Therefore, the Government volunteered to pay the hard work turned out by the staff

by means of a token cash benefit equal to one month''s basic pay. Presumably on account of the emergency no overtime allowance could be

sanctioned. It might perhaps involve a larger expenditure. To quote the Ministry of Finance letter F. No. 1-11015/1/76 Ad. IX, dated January 16,

1976, the first paragraph itself explains the circumstances under which it is granted,

''I am directed to state that in appreciation of the meritorious work done by the Income Tax personnel for the success of the voluntary disclosure

schemes, the Government have decided to grant them reward of an amount equal to one month''s basic pay''.

The above extract makes it clear that such reward was granted in public interest. It would be surprising if the Government were to grant rewards

for reasons other than public interest. It is, therefore, evident that the terms of Section 10(173) are completely satisfied in the present case as the

circular gives the circumstances under which the rewards are granted. The voluntary disclosure scheme could only have been conceived in public

interest as we do not see any other reason for this scheme coming into existence. If any person rendered sincere work to make this scheme a

success, and if he is rewarded for it, such grant of reward cannot but be in public interest. There is no specific mode of approval indicated in the

statute. No further approval is necessary or called for. The section is clear in its language and does not raise any problem of construction.

Therefore, we do not find that any question of law arises out of the Tribunal''s order. Even assuming that a question of law arises, the answer is

self-evident and, therefore, the reference shall be wholly academic and unnecessary. The petition is accordingly dismissed. Only because the

respondent appears in person and not through counsel, we do not award any costs.