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The Supreme Court has granted a stay on the recovery of income tax demands, pending the resolution of an appeal before the Income Tax Appellate Tribunal (ITAT). This decision came after the news portal’s Special Leave Petition (SLP) challenging a Delhi High Court order was reviewed.
The division bench, comprising Justices BV Nagarathna and Nongmeikapam Kotiswar Singh, addressed the plea filed by NewsClick. The Court directed that no further recovery of the outstanding tax amount should be carried out until the ITAT has made its decision. This order takes into account that approximately 30% of the demanded amount has already been recovered.
NewsClick’s plea stemmed from a series of decisions by tax authorities that had rejected the portal’s request for a stay on the income tax demand while its appeal was pending. In February and November 2023, the tax authorities denied the request, mandating that NewsClick pay 20% of the demand before seeking a stay during the pendency of its appeal before the Commissioner of Income-Tax (Appeals).
Subsequently, the Income Tax Appellate Tribunal upheld the assessment order and refused to grant a stay, leading to a writ petition filed before the Delhi High Court. The High Court dismissed the petition, prompting NewsClick to challenge the order through the SLP.
During today’s proceedings, senior advocate Kapil Sibal highlighted the financial strain on NewsClick, pointing out that the organization has been unable to pay salaries or provident funds. Senior advocate Devadatt Kamat further informed the Court that around 30% of the demanded amount had already been collected.
In response, the Supreme Court disposed of the plea while modifying the High Court’s order, instructing the ITAT to consider the appeal on its merits without being influenced by prior observations from the High Court. The ITAT is expected to review the appeal in due course.
The Delhi High Court had previously questioned NewsClick’s financial claims and the state of its accounts, but this earlier decision was withdrawn with the option to pursue the matter before the ITAT.