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Synopsis

The Income Tax department has contended before the Supreme Court that NGO Environics Trust was being funded by foreign entities to "stall public projects which are in interests of India".

"In totality of the facts, the Environics Trust is funded by the foreign entities for stalling public projects in India and abroad. It is also found that the Trust is arranging protestors against the project on paid basis. Both the FCRA registration and registration under Section 12A r.w.s 12AA and 12AB of the IT Act of the petitioner has been cancelled," the department said.

On Monday, a bench of Justices Sanjiv Khanna and Dipankar Datta allowed the department to continue its assessment or reassessment proceedings against the NGO but asked it not to pass final order till further directions.

Senior advocate S Muralidhar, appeared for the NGO, which challenged the Delhi High Court's declining its plea against the reassessment notice issued by the I-T department. 

Solicitor General Tushar Mehta submitted the NGO was involved in organising protests which were not its stated objects.

In its affidavit, the department said the registration under FCRA of the petitioner trust has also been cancelled by an order on March 04, 2024, whereas on the contrary, it has made an assertion that the competent authority has not yet cancelled its registration.

"The present case is at the stage of challenge to a notice under S 148 and the scope of judicial review is limited to the extent of examining whether the jurisdictional requirements of reopening under S 147/148 is present or not. Even the arguments on the merits of the case have to be examined from the point of view as to whether there exists a prima facie case for the AO to have "reason to believe" as to whether income has escaped assessment/information suggesting that income has escaped assessment," it said.

The department claimed a concerted effort by foreign entities in funding Indian NGOs/trusts in order to stall the public projects and affect the economic interests of India, has come to light which though has not been a factor considered while issuing the notice under Section 148 of the Income Tax Act but it would be a relevant factor to support the finding of the high court that this is not a fit case for exercise of jurisdiction under Article 226 of the Constitution.

The department said it is worth mentioning that in the case of Environics Trust, survey action was carried out along with some other trusts like Centre for Policy Research (CPR), Oxfam India, Legal Initiative for Forest and Environment (LIFE) and Care India Solution for Sustainable Development (CISSD).

It is seen these organisations are having close relations with each other and their main persons are interlinked and these NGOs are directly or indirectly involved in agitation or litigation beyond their objects, the department claimed.

“All these NGOs are funded by foreign entities for these activities which cannot be said to be genuine or in line with the objects of these trusts/institutions. CPR is doing environmental justice programs for US based entity Namati Inc. LIFE is funded by Earth Justice. Oxfam India receives most of its donations from foreign entities. Environics Trust is funded by Both Ends, Greenpeace, PYWP etc. It is observed that the said foreign funding is influencing the working of these trusts and these trusts are indulging in activities contrary to the objects for which they were formed," the department said.

Cause Title: Environics Trust Vs The Dept Commissioner of Income Tax