Regarding tax recovery requests, the Supreme Court awarded PPK Newsclick Studio Pvt Ltd, the firm that operates the news portal NewsClick, a week’s temporary protection. The corporation was given permission to petition the High Court after the court dismissed its Article 32 plea.
The bench of CJI Sanjiv Khanna and Justices Sanjay Kumar and KV Viswanathan was hearing a writ petition filed under Article 32 by news portal NewsClick against the tax recovery demands over ‘unexplained cash credits’ and held that let there be no coercive action against the Petitioners for one week”
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Speaking for the news outlet, Senior Advocate Kapil Sibal emphasized that the demand notice is for Rs. 3.6 crores, however the petitioners only have 28 lakhs in their bank account. “Why don’t you take recourse to the procedure which states that if a similar issue is already pending before the ITAT, the assessee can move an application asking the assessing officer to stay and wait for the order of the ITAT?” the CJI said, urging the petitioners to file a case in the Delhi High Court. “Why don’t you use that process again?”
The bench issued the following directive, providing the agency with temporary protection for a week, while rejecting the petition.
” We are not inclined to entertain the present petition under Article 32 of the Constitution and we leave to the petitioner to approach the Jurisdiction of the High Court under Article 226 of the Constitution of India. However, we make no comments on merits on the assertions made by the Petitioner….let there be no coercive action against the Petitioners for one week”
Before leaving, Sibal countered that since S.68 of the Income Tax Act of 1961 deals with cash credits rather than banking transactions, it would not apply in this particular situation. He said that the petitioner company did not engage in cash exchanges in general, but exclusively in check transactions. He clarified:
We’ll take the matter to the High Court because, on the surface, S.68 doesn’t apply because it’s a banking transaction and has nothing to do with cash, and the assessment exceeds what I’ve been given! It exceeds the gross amount that was received. There is not a single cash transaction—all transactions are made by check—but we will still go to the High Court and return if they refuse to pay us anything.”
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Prior to this, on August 9, 2024, the Court dismissed a motion from NewsClick seeking a stay of the income tax claim and ordered that further recovery of an unpaid sum be suspended until the appeal before the Income Tax Appellate Tribunal (ITAT) was resolved. Considering that about 30% of the demand has been met, this order was approved.
In a plea filed by Newsclick against the Delhi High Court‘s decision to reject a stay on the income tax claim, the bench of Justices BV Nagarathna and Nongmeikapam Kotiswar Singh issued the aforementioned verdict. The Court published a notice in the SLP on July 8.
On November 18, the Top Court ordered ICICI Bank to de-freeze the Agency’s bank accounts in accordance with the order dated August 9.
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