• Notification Date: 19-04-2024
• Notification No: N/A

NGO Environics Trust ‘stalled public projects through paid protests’; Income Tax Dept reports SC

Funded by foreign entities, NGO Environics Trust stalled public projects that are in the interest of India through paid protests, the Income Tax department has told the Supreme Court (SC), while defending its notice issued to the non-profit organisation.

The department also claimed that a concerted effort by foreign entities in funding Indian NGOs/Trusts to stall public projects and affect the economic interests of India has come to light.

Served last year, the notice under Section 148 of the Income Tax Act (IT) 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.

Environics Trust had first challenged the notice before the Delhi High Court, which rejected its plea in November last year, observing that judicial review in such instances was restricted.

The NGO later raised the challenge in the Supreme Court. Responding to its appeal in the SC, the Income Tax department has given a break-up of the foreign contributions Environics Trust received between 2015 and 2021.

The NGO was set up in 2003 with the following objectives: implementing programmes for community development; conducting research on environmental issues, promoting art and culture; innovating and implementing technical and institutional designs for integrated development; providing assistance to communities to redress injustices and upholding their rights; and applying results from scientific research for protecting the local and global environment.

However, the Income Tax department’s affidavit has alleged that the NGO was involved in activities that were contrary to its objectives. It was for this reason that the department cancelled Environics Trust’s 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.

According to the collated data put out in the affidavit, Environics Trust got 100 percent of its funds through foreign donations during three financial years — 2016-17, 2019-20 and 2020-21. While it got a little over 79 percent of its funds from foreign contributors in 2018-19, donations from foreign entities in 2015-16 and 2017-18 scaled beyond 90 per cent of its total contributions.

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, Earth Day Network, Earthlife, Asia Monitor Resource Centre, Oxfam India and Sara Services Charitable Trust.

The trust’s activities “appear to be a systematic effort by foreign entities to stall development projects in India”, the Income Tax department’s affidavit said.

It said that the notice for reassessment was not based only on this factor, but was relevant to support the high court’s findings about its limitations in exercising its jurisdiction under Article 226 — the provision of the Constitution that is invoked to move the HC for enforcement of fundamental rights.

The income tax survey preceding the notice showed that the “trust’s activities are neither genuine nor being carried out as per the object” and that the trust was “misusing foreign contributions” to fund “protests against development projects in Odisha in the guise of distribution of relief packages to households”. Evidence was gathered to show bank transactions of the money that was paid to those who participated in the protests.

The Income Tax department has also said that it is in possession of agreements that Environics Trust allegedly signed with foreign entities to mobilise protests against coal mining and steel projects in Odisha. It has also named other trusts in the affidavit to claim that they are directly or indirectly involved in agitations or litigations beyond their objects as the foreign funding received by them is influencing their work.

The department also took exception to the fact that the trust suppressed the fact that its registration under Section 12A of the IT Act and FCRA has been cancelled. Non-declaration of this fact was one of the grounds on which the high court had rejected Environics Trust’s petition challenging the income tax notice under Section 148.

At this juncture, the department argued, the scope of judicial review is limited as the court cannot go into the sufficiency or correctness of the reasons behind the notice, for which the assessing officer of the IT department is the authorised person under the law.