• Notification Date: 16-08-2023
• Notification No: N/A

Delhi HC passes Stay-order on Income tax Re-assessment Proceedings against Oxfam India

In an “interim order”, the Delhi High Court recently stayed the Income Tax (IT) re-assessment proceedings initiated against the non-profit group Oxfam India. 

In its August 4 order issuing notice to the authorities including the Deputy Commissioner of Income Tax Central Circle, New Delhi, a division bench of Justices Rajiv Shakdher and Girish Kathpalia said, “According to us, the matter requires further examination. Accordingly, issue notice…In the meanwhile, there shall be a stay on the continuation of the reassessment proceeding, till further directions of the court”. 

The matter is now listed on November 22. 

A survey conducted at Oxfam’s Office on September 7, 2022, led to initiation of the re-assessment proceedings. A notice was issued to Oxfam under Section 148A(b) of the Income Tax Act on March 29, 2023, triggering the re-assessment proceedings against it pertaining to certain aspects. Oxfam approached the High Court regarding this matter. 

Under Section 148A(b) of the Income Tax Act, an assessing officer can issue a notice directing the assessee to show cause as to why a notice of income escaping assessment should not be issued. 

The authorities alleged that Oxfam was engaged in litigation activities which were violative of provisions of the Foreign Contribution (Regulation) Act, 2010. Secondly, Oxfam had allegedly received “suspicious contribution from foreign nationals”. Third, Oxfam had allegedly failed to recognise as revenue Rs 15.09 crore (Rs 15,09,85,211) received as advances against future projects. Fourth, the authorities said that Oxfam had not applied 85 per cent of its total receipts towards its objects in the relevant period, as required under the provisions of the Act. 

Oxfam argued before the high court that the charge levelled against it, that it has received contributions from foreign nationals which were suspicious, is misconceived as the details and names of contributors were provided. It further said that the assessing officer’s (AO) assertion that Rs 15,09,85,211 should have been recognised as income is completely misconceived, “as these were advances which had to be utilized for future objects, and therefore was not income which arose, in the period in issue”. 

Oxfam also said that the authorities did not share their survey report with it and the proceedings initiated against it were “barred by limitation”. It also submitted that an amendment brought in Section 149(1)(b) of the Act pursuant to the Finance Act, 2022 would not be applicable to the non-profit group as that amendment would be applicable only from Assessment Year 2022-23. 

As per the amended Section 148(1)(b), a notice for escaped income assessment under Section 148 will not be a notice for the relevant assessment year if three years (but not more than ten years) have elapsed from the end of the relevant assessment year unless the assessing officer has in his “possession books of account or other documents or evidence” which reveal that the income chargeable to tax, represented in the form of an asset, expenditure in respect of a transaction or in relation to an event or occasion or an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to Rs 50 lakh or more. 

Oxfam also referred to the writ petition moved by the Centre for Policy Research (CPR) stating that there are somewhat similar issues being considered by the high court in CPR’s plea as well. 

The authorities said Oxfam’s Foreign Contribution Regulation Act (FCRA) licence has “run into rough weather” wherein Oxfam has filed a separate petition pending before a single judge bench of the high court, however “no interim relief” has been granted by that bench.