New Delhi :The Income Tax Department has told the Supreme Court that NGO Environics Trust is funded by foreign entities for stalling projects in the country and it is also arranging protestors against the projects on paid basis.
The IT department, in an affidavit filed in the apex court, 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)”.
The department said these organizations 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.
“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”, said the affidavit, while defending the notice issued to the non-profit organisation.
The notice under Section 148 of the Income Tax Act (IT), which was served last year, empowers the department to initiate reassessment of an individual’s previously filed income tax returns if there is a suspicion that the income had escaped assessment.
Initially, the NGO challenged the notice before the Delhi High Court, which rejected its plea in November last year. The high court had observed that judicial review in such instances was restricted. The NGO moved the apex court against the high court order.
The IT department has brought on record a break-up of the foreign contributions Environics Trust received in F.Y. 2015-16. The main donors to Environics Trust have been Foundation for Ecological Security, Centre for Study of Public, DWOI-New Ways to Palo Alto, Global Greengrants Fund, European Climate Foundation (ECF), Earth Day Network, Earthlife, Asia Monitor Resource Centre, Oxfam India and Sara Services Charitable Trust.
According to the department, the NGO received twice 100 percent foreign contributions in F.Y. 2019-20 (Rs 11, 625,777) and F.Y. 2020-21 (Rs 40, 226, 970), and nil domestic contributions during this period. The NGO also received 98.66% foreign contribution during F. Y. 2015-16, and for F.Y. 2016-17 100% foreign contribution.
While it got a little over 79% of its funds from foreign contributors in 2018-19 and in 2017-18, the foreign contributions were over 90 per cent of its total contributions.
Claiming that the NGO was involved in activities contrary to its objectives, the department cancelled its Foreign Contribution (Regulation) Act (FCRA) permission as well as its registration under Section 12A of the IT Act, which gives tax exemptions to non-profit entities such as NGOs, welfare societies and charitable trusts.
The income tax survey preceding the notice showed that the NGO activities were neither genuine nor being carried out as per the object, instead the NGO funded protests against development projects at a project site in a village in Odisha under the guise of distribution of relief packages to households. “It is found that the NGO has transferred an amount of Rs 1250 per individual from its ICICI bank account to those individuals who were involved in the said protests and named in the FIR registered”, said the affidavit. “These protests were apparently funded by Fair Green and Global Alliance II, which consists of 6 Dutch member organization”, said the affidavit.
The IT department said the NGO indulged in a protest against a multinational corporation in Visakhapatnam as per evidence available in form of email on June 5, 2020; NGO was found to be involved with Mineral Inheritors Rights Association for protesting steel and coal projects in Odisha that is not as per the object of the trust.
“Involvement of Environics Trust with ECF for protesting against thermal power projects in India is not as per the objects of trust…..assessee trust is making payment to Demi Oraon who is indulging in rioting and unlawful assembly….”, added the affidavit.
Solicitor General Tushar Mehta and advocate Zoheb Hossain represented the IT department before the apex court.
During the hearing today, Mehta submitted before a bench led by Justice Sanjiv Khanna that it is a foreign funded trust and its main purpose is to stall projects, and their FCRA license is cancelled. “Now, it is time to put it on record….”, said Mehta.
The bench said the IT department can continue with the reassessment/assessment proceedings but no final orders shall be passed without prior permission of the court and added that the NGO must cooperate in the assessment proceedings and furnishing documents and papers as required.
Senior advocate S Muralidhar, representing the NGO, argued that they have challenged the order of the high court, which junked the NGO’s plea against the reassessment notice issued by the I-T department. Mehta 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 and added that a survey action was carried out by the investigation wing of the I-T department at Delhi on September 7, 2022. Mehta added that the materials collected during the survey were shared with the assessing officer (AO).
The affidavit, seeking dismissal of NGO’s plea, said: “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”.
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