Today, On 12th July, The Supreme Court declined to entertain a plea by an environmental lawyer challenging a High Court verdict related to an income tax assessment. The lawyer had sought to set-aside the High Court’s decision, but the Supreme Court refused to intervene.
New Delhi: The Supreme Court, On Monday, declined to hear the appeal of prominent environmental lawyer Ritwik Dutta, who challenged a Delhi High Court decision dismissing his petition against the reopening of his income tax assessment for the fiscal year 2020-21.
The Delhi High Court, on May 29, 2024, rejected Dutta’s petition and upheld the order issued under section 148A(d) of the Income Tax (I-T) Act. This section authorizes the Assessing Officer (AO) to reassess tax returns if there is evidence of income being inaccurately reported.
According to section 148A of the I-T Act, if the tax officer has information suggesting that a taxpayer has undisclosed income for a specific assessment year, the taxpayer must be given an opportunity to explain before any notice is issued.
Solicitor General Tushar Mehta, representing the Income Tax department, noted that Dutta, who serves as the managing trustee of the ‘Legal Initiative for Forest and Environment’ (LIFE), subject to a survey by I-T authorities on September 7, 2022, under section 133A of the Act.
Section 133A empowers tax officials to enter and inspect premises where they believe relevant documents, books, accounts, or other materials may be found. They can seize such materials if discovered during the inspection.
The I-T department revealed that, based on the survey report and seized materials, LIFE received a sum of Rs. 4.95 crore during the assessment year 2020-21 from EarthJustice, USA.
The I-T department stated,
“During the survey, it was found that Dutta had previously operated a proprietorship called M/s Lawyers Initiative for Forest & Environment (LIFE), through which he received Rs. 22 crores in professional fees from EarthJustice, USA, over the preceding five years,”
The proprietorship later converted into a Limited Liability Partnership (LLP). The department further alleged that funds provided by EarthJustice being used for activities beyond the approved objectives of LIFE, such as litigating against coal power plants in India. These activities were purportedly masked as professional services, which could not be considered legitimate professional services rendered by Dutta to EarthJustice.
The Solicitor General argued that although the amount of Rs. 4.95 crore claimed as professional fees by Dutta, EarthJustice not involved in any of the cases he represented.
On April 4, 2024, the Assessing Officer (AO) issued an order to reopen Dutta’s assessment for the year 2020-21.
The Court noted,
“The High Court, in its judgment, merely declined to interfere with the ongoing proceedings and left it to the assesses (Dutta) to present his case before the statutory authorities,”
The Supreme Court chose not to entertain the plea at this point.
In a related matter, the Central Bureau of Investigation (CBI) had registered an FIR against Dutta in April last year for alleged violations of the Foreign Contribution (Regulation) Act (FCRA).
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This action followed a complaint from the Union Home Ministry, which accused LIFE of receiving funds from EarthJustice USA to litigate against Indian coal projects with the aim of “targeting and stalling them,” an act considered a violation of the FCRA by the ministry.
The CBI FIR included a criminal complaint against Dutta, who has been honoured with several awards, including Sweden’s Right Livelihood Award in 2021 for his efforts in environmental protection through legal means in India.
The complaint alleged that the funds received from EarthJustice USA, labelled as “professional receipts,” were actually intended to finance efforts to hinder the progress of development projects in India.