NEW DELHI: The Delhi high court on Friday refused to entertain a plea filed by the news portal NewsClick challenging the Income Tax (IT) department’s order, directing it to pay over ₹19 crore as an outstanding tax demand on or before March 2.
On January 31, the IT department issued an assessment order (AO) for the assessment year (AY) 2022-23, demanding an amount of ₹19.14 crore.
The portal had approached the Delhi high court seeking a stay and consequently quashing the January 31 order, days after the Supreme Court had dismissed PPK Newsclick Studio Pvt Ltd’s petition seeking similar relief.
The Supreme Court on February 22 had, however, granted interim protection for one week against any coercive action with regards to the outstanding tax demand and granted it the liberty to approach the Delhi high court.
A bench of justices Yashwant Varma and Harish Vaidyanathan Shankar of the high court rejected the portal’s plea on Friday, taking note of the fact that the Income Tax Appellate Tribunal (ITAT) was already dealing with a similar issue pertaining to the assessment year 2021-22. The judges, however, granted the portal liberty to approach the ITAT against the order and to stay on the demand.
“In light of the fact that an identical issue is engaging the attention of the appellate authority, it may not be justified to entertain the writ challenge at this stage,” the court said in its order.
The portal’s petition, argued by senior advocate Devadatt Kamat and advocate Rohit Sharma, said the IT department had been raising similar tax demands by invoking section 68 of the Income Tax Act for each AY, starting from AY 2018-19 up to the subject AY 2022-23, doubting the genuineness of the services offered by it and that the same could result in shutting down its operations.
Section 68 states that if any sum is found credited in the books of an assessee for the previous year, and no explanation is provided by the assessee to the satisfaction of the assessing officer, the credited amount may be treated as the income of the assessee for that previous year and charged to income tax. As a result, all legitimately incurred expenses are considered unaccounted for, and a tax demand is raised at the penal rate of 60%, along with surcharge, etc.
To be sure, in August 2024, the Supreme Court stayed further recovery for the assessment year (AY) 2021-22, and on November 18, 2024, it ordered the de-freezing of the company’s bank account.
The petition went on to add that the portal currently had a balance of ₹28 lakh in its account, which was required to pay salaries and meet other expenses of the portal.
The IT department opposed NewsClick’s plea, saying that the portal had directly approached the high court for stay, despite having a remedy of challenging the order before the ITAT.
The portal’s founder Prabir Purkayastha was arrested in October 2023 for allegedly receiving money for “pro-China propaganda” and was charged under the Unlawful Activities (Prevention) Act, or UAPA. In April last year, the Supreme Court highlighted serious procedural lapses by the Delhi Police in his arrest and directed his release on bail in the terror case.