Foreign Entities Funding NGOs To Stall Public Projects: IT Dept Tells SC

The Income Tax Department on Monday told the Supreme Court that there is "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"

The IT department, while opposing the plea by NGO Environics Trust challenging the notice issued to it by the department for reassessment of tax returns, told the apex court: "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)".

The department stated that these organizations maintain close ties with one another, with key individuals being interconnected. Furthermore, these NGOs are involved, either directly or indirectly, in activities such as agitation or litigation that extend beyond their stated objectives.

The affidavit states, "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.

The affidavit stated that the foreign funding in question is impacting the operations of these trusts, leading them to engage in activities that deviate from their intended purposes. This justification was provided while defending the notice issued to the non-profit organization.

"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 protesters to protest against public projects of India. More than 90% of the income of the petitioner Trust is from foreign donations," the affidavit adds.

A bench of justices Sanjiv Khanna and Dipankar Datta was hearing an appeal of the NGO challenging the November 8 order of last year of the Delhi High Court.

Section 148 confers upon an Assessing Officer (AO) the authority to either assess or re-assess any taxable income that may have evaded detection and has not been evaluated in accordance with the prescribed guidelines outlined in 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 claimed, adding that the NGO had allegedly transferred Rs 1,250 each in the bank accounts of 711 people on November 15, 2020.

The Supreme Court has allowed the Income Tax department to initiate the reassessment proceedings of taxable income of the NGO, Environics Trust and said that the NGO shall cooperate with the 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.