Foreign entities funding NGOs to stall public projects: I-T Dept to SC

New Delhi: The Supreme Court allowed the Income Tax department to initiate the reassessment proceedings of taxable income of the NGO, Environics Trust, which is accused of organising staged protests against developmental projects, but said no final orders shall be passed.

A bench of justices Sanjiv Khanna and Dipankar Datta, which was hearing an appeal of the NGO challenging the November 8 order of last year of the Delhi High Court, said Environics Trust shall cooperate with the I-T investigation.

"The department can continue with the reassessment/assessment proceedings but no final orders shall be passed without prior permission of the court," the bench ordered.

Senior advocate S Muralidhar, appearing for the NGO, said they have challenged the order of the high court, which has dismissed its plea challenging the reassessment notice issued by the I-T department.

Solicitor General Tushar Mehta, appearing for the department, said the high court dismissed their plea as there was suppression of material facts in relation to the cancellation of its registration under the I-T Act.

He said in this case, a survey action was carried out by the investigation wing of the I-T department at Delhi on September 7, 2022 and materials collected during the survey were shared with the Assessing Officer (AO).

Mehta pointed out that after analysing the material and based on independent application of mind to the evidence, it was found that the activities of the NGO are neither genuine nor being carried out according to the objects of the Trust.

He said the department has filed an affidavit raising preliminary objection to the petition of the NGO.

The affidavit said, "It is found that the petitioner Trust is being funded by foreign entities and is being used to stall public projects which are in the interest of India. It is also found that the petitioner trust is hiring paid protestors to protest against public projects of India. More than 90 per cent of the income of the petitioner trust is from foreign donations."

It said that the NGO's activities appear to be a "systematic effort" by foreign entities to stall development projects in India, which though has not been a factor considered while issuing the notice under section 148 of the Income Tax Act.

Section 148 grants an AO the power to either assess or re-assess any taxable income that may have gone under the radar, and has not been assessed according to the stipulated guidelines of the Income Tax Act.

"The Environics Trust has funded protests against development projects at (the) project site in a village in Odisha under the guise of 'distribution of relief packages to households'," the affidavit said, adding that the NGO had allegedly transferred Rs 1,250 each in the bank accounts of 711 people on November 15, 2020.

Thus, the Environics Trust is misusing the Foreign contribution for stalling development projects instead of using them for the stated purpose, it said.