Delhi High Court stays income tax proceedings against Centre for Policy Research

The Delhi High Court recently stayed the income tax proceedings initiated against the think tank Centre for Policy Research (CPR) [Centre for Policy Research v Deputy Commissioner of Income Tax, Central Circle 14, New Delhi & Anr]..A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia passed the order on May 24 after CPR moved a plea against the notices issued by the Income Tax (IT) department under Sections 148A(b) and 148 the Income Tax Act.“According to us, the matter requires examination. Besides this, as noticed above, it is, at least, prima facie, evident to us that Section 149 of the Act, as amended, may not be applicable… In the meanwhile, there shall be a stay on the continuation of the reassessment proceedings, till further directions of the court,” the Court ordered..CPR has been involved in research with a focus on India’s 21st-century challenges since the year 1973. It is headed by political scientist and former principal of Lady Shri Ram College, Meenakshi Gopinath. Yamini Aiyar is the think tank’s President and Chief Executive. The other members on its governing board include former foreign secretary Shyam Saran and Senior Advocate Shyam Divan.Their Foreign Contribution Regulation Act (FCRA) application was suspended by the Central government in February 2023. .The Court was told that the tax reassessment relates to the assessment year 2016-17 and the proceedings began after a survey conducted by the IT authorities at the CPR premises in September last year.Senior Advocate Arvind P Datar appeared for the petitioner and argued that authorities did not furnish the entire survey report to the think tank even though it forms the basis for triggering the reassessment proceedings. He said that this was in violation of principles of natural justice.Datar further contended that the amended Section 149 of the Act (which came in force on April 1, 2022) has been applied to the petitioner, although the transaction relates to assessment year 2016-17.However, the IT department said that the information which emerged post the survey would be deemed to be considered as information, suggesting that income chargeable to tax has escaped assessment..After considering the case, the Bench noted that the entire survey report was not submitted to the CPR and even the IT department had conceded that only the relied-upon portion of survey report was provided to the petitioner.The Bench said that the matter requires consideration and therefore, passed an interim order staying the proceedings. It also issued notice to the IT department.The case will be considered next on November 22..Senior Advocate Arvind P Datar along with advocates Sachit Jolly, Disha Jham, Soumya Singh and Sohum Dua appeared for CPR.Senior Standing Counsel Vipul Agarwal and Advocate Dushyant Gupta appeared for the IT department..[Read Order]