The Supreme Court granted permission for the Income Tax department to reassess the income of an NGO without issuing final orders. This decision allows for a review of financial records without concluding on tax liabilities immediately. The ruling highlights the court’s cautious approach to tax reassessment processes, ensuring fair and thorough examination before reaching final conclusions. The NGO’s income will be subject to scrutiny following this decision, maintaining legal diligence in tax matters.
New Delhi: On Monday, the Supreme Court permitted the Income Tax department to begin reassessment proceedings regarding the taxable income of Environics Trust. The NGO alleged to have orchestrated staged protests against development projects. However, the court specified that no definitive orders would be issued yet.
Justices Sanjiv Khanna and Dipankar Datta, overseeing the appeal by Environics Trust against the Delhi High Court’s November 8 order, directed the NGO to cooperate with the I-T investigation.
The order stated,
“The bench directed that while the department may proceed with reassessment/assessment proceedings, it must refrain from issuing final orders without prior court approval,”
Senior advocate S Muralidhar, representing the NGO, mentioned that they have contested the high court’s order, which rejected their plea against the reassessment notice from the I-T department.
Solicitor General Tushar Mehta, representing the department, noted that the high court dismissed their plea due to the suppression of material facts regarding the cancellation of the NGO’s registration under the I-T Act.
He mentioned that in this instance, a survey operation conducted by the I-T department’s investigation wing in Delhi on September 7, 2022, and the materials gathered during the survey shared with the Assessing Officer (AO).
Mehta highlighted that upon scrutinizing the evidence independently stated,
“It was discovered that the NGO’s activities are neither authentic nor aligned with the Trust’s objectives.”
He added that the department submitted an affidavit raising initial objections to the NGO’s petition.
According to the affidavit,
“The investigation revealed that the petitioner Trust receives funding from foreign entities and is employed to obstruct public projects beneficial to India. Furthermore, it was uncovered that the petitioner trust pays individuals to protest against Indian public projects. Over 90 percent of the trust’s income comes from foreign donations.”
Read Also:Electoral Bonds Case | Chronology of Events
It noted that the NGO’s actions seem to be a “systematic effort” by foreign entities to impede India’s development projects, although this was not a factor in issuing the notice under section 148 of the Income Tax Act.
Section 148 provides an Assessing Officer (AO) with the authority to assess or reassess any taxable income that may have escaped assessment as per the Income Tax Act’s regulations.
According to the affidavit,
“Environics Trust has financed demonstrations opposing development projects at a project site in a village in Odisha, purportedly under the guise of ‘providing relief packages to households’.”
The affidavit further claimed that the NGO supposedly deposited Rs 1,250 into the bank accounts of 711 individuals on November 15, 2020.
The affidavit stated that,
“The Environics Trust is utilizing foreign contributions inappropriately by obstructing development projects instead of utilizing them for their intended purpose.”