The Supreme Court granted NewsClick a one-week protection from any coercive action over a tax demand. A bench led by Chief Justice of India Sanjiv Khanna, however, rejected a writ petition filed by PPK Newsclick Studio Pvt Ltd. The petition was filed directly under Article 32 of the Constitution. The court’s decision provides temporary relief but does not settle the tax dispute.
New Delhi: The Supreme Court granted interim protection for one week against any coercive action against the news portal NewsClick, which is facing a tax demand exceeding Rs. 19 crore.
The court also allowed the portal the option to challenge the revenue department’s tax demand before the Delhi High Court.
A bench led by Chief Justice of India (CJI) Sanjiv Khanna, along with Justices Sanjay Kumar and K.V. Viswanathan, dismissed a writ petition filed directly by PPK Newsclick Studio Pvt Ltd under Article 32.
Also Read: Delhi Police Files Chargesheet Against NewsClick for Alleged “Pro-China Propaganda”
The bench stated,
“We grant liberty to the petitioner to approach the Delhi High Court… for a week, no coercive action shall be taken.”
Senior advocates Kapil Sibal and Devadatt Kamat, along with advocate Rohit Sharma, represented the petition. Sibal argued against the tax demand, describing it as excessive and exceeding the company’s receipts for the assessment year.
The demand, stemming from an assessment order dated January 31, 2025, required payment of Rs. 19.14 crore by March 2.
The portal’s founder, Prabir Purkayastha, was arrested in October 2023 for allegedly receiving money for “pro-China propaganda” and charged under the Unlawful Activities (Prevention) Act (UAPA).
The income tax department has issued similar tax demands since the 2018-19 assessment year. In August 2024, the Supreme Court had stayed further recovery for the 2021-22 assessment year, and on November 18, 2024, it ordered the de-freezing of the company’s bank account.
Following this, the petitioner firm received Rs.40.52 lakh, which was used to settle outstanding provident fund dues, repay loans, and cover subscriptions, leaving a balance of Rs.28 lakh needed for salaries and other expenses.
The petition stated,
“If the income tax department is able to attach the petitioner’s bank accounts and recover the amount lying in it, the petitioner organisation, which has downsized from 79 employees and 25 full-time consultants in December 2023 to just 7 consultants currently, will be forced to shut down.”
The income tax department invoked Section 68 of the Income Tax Act against the petitioner for assessment years ranging from 2018-19 to 2022-23. This section allows credited amounts in an assessee’s books to be treated as income if not satisfactorily explained, leading to tax demands at penal rates of 60% plus surcharges.
NewsClick asserted that it faces tax implications equal to or surpassing its gross receipts, without accounting for expenses. Sibal noted that all transactions are conducted via cheques, with no cash transactions involved.
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