On Friday, the Delhi High Court declined to entertain a petition filed by news portal NewsClick, which had challenged the Income Tax (I-T) department’s order demanding over ₹19 crore in outstanding tax to be paid by March 2.
NewsClick had approached the high court seeking a stay and the quashing of the January 31 order, following the Supreme Court’s recent dismissal of a similar plea by PPK Newsclick Studio Pvt Ltd.
On February 22, the Supreme Court had granted interim protection for one week against any coercive action related to the tax demand, allowing the portal to take its case to the Delhi High Court.
A bench comprising Justices Yashwant Varma and Harish Vaidyanathan Shankar rejected the petition, citing that the Income Tax Appellate Tribunal (ITAT) was already handling a similar matter concerning the assessment year 2021-22. However, the court permitted NewsClick to approach the ITAT to challenge the order and seek a stay on the demand.
The portal’s petition, argued by senior advocate Devadatt Kamat and advocate Rohit Sharma, stated that the I-T department had been issuing similar tax demands under Section 68 of the Income Tax Act for multiple assessment years, from 2018-19 to 2022-23, questioning the legitimacy of its services. The petition warned that these demands could force the portal to shut down operations.
Section 68 allows tax authorities to treat any unexplained credited amounts in an assessee’s books as income for that year, subjecting it to a penal tax rate of 60% along with surcharges and other levies. This provision results in all legitimately incurred expenses being classified as unaccounted for, leading to hefty tax demands.
In August 2024, the Supreme Court had stayed further tax recovery for the assessment year 2021-22. Later, on November 18, 2024, it ordered the de-freezing of the company’s bank account.
The petition further stated that NewsClick currently has ₹28 lakh in its account, which is needed to cover salaries and other operational expenses.
The I-T department opposed the petition, arguing that NewsClick had directly approached the high court for a stay despite having the option to challenge the order before the ITAT.
Meanwhile, NewsClick’s founder, Prabir Purkayastha, was arrested in October 2023 over allegations of receiving funds for “pro-China propaganda” and was charged under the Unlawful Activities (Prevention) Act (UAPA). In April last year, the Supreme Court pointed out serious procedural lapses in his arrest by the Delhi Police and ordered his release on bail in the terror case.