Foreign entities fund Indian NGOs to halt public projects: I-T dept to SC

The Environics Trust had filed a petition in the Delhi High Court, contesting the notice issued to it under Section 148 of the Income Tax Act, 1961

The Income Tax (I-T) Department told the Supreme Court (SC) that there has been “a concerted effort by foreign entities in funding Indian NGOs/trusts in order to stall the public projects and affect the economic interests of India”, according to a report in The Indian Express (IE). The I-T department said this while opposing the plea filed by NGO Environics Trust challenging the notice issued to it by the former for the reassessment of tax returns.

The IE reported that the I-T department, in an affidavit, said that it conducted a survey against the NGO on September 7, 2022, and “after analysing the material and based on independent application of mind to the evidence, it was found that its activities are neither genuine nor being carried out as per the objects of the Trust”.

The affidavit stated, “It is found that the petitioner trust is being funded by foreign entities and is being used to stall public projects, which are in the interest of India. It is also found that the petitioner Trust is hiring paid protesters to protest against public projects of India. More than 90 per cent of the income of the petitioner trust is from foreign donations.”

The affidavit further said the trust’s “activities appear to be a systematic effort by foreign entities to stall development projects in India, which though has not been a factor considered while issuing the notice under Section 148 of the Income Tax Act, it would be a relevant factor to support the finding of the Hon’ble High Court that this is not a fit case for exercise of jurisdiction under Article 226”, the IE reported.

A Bench, headed by Justices Sanjiv Khanna and Dipankar Datta, was hearing an appeal of the NGO challenging the November 8 order of last year of the Delhi High Court. The Trust had filed a petition in the Delhi High Court, contesting the notice issued to it under Section 148 of the Income Tax Act, 1961. This provision grants the department authority to reassess tax returns if it believes income has evaded assessment.

The I-T Department said the trust had received Rs 14.27 crore between 2016 and 2021, of which Rs 13.66 crore was by way of foreign contributions.

The trust obtained its registration in March 2003 with the aim of conducting research and development concerning environmental matters and human behavior, implementing programmes for community development, and offering support to communities in addressing injustices and safeguarding their rights. However, the affidavit said that the survey showed that the trust “has funded protests against development projects in a village in Odisha under the guise of distribution of relief packages to households. It is found that Environics Trust has transferred an amount of Rs 1,250 per individual from its ICICI bank account... to those who were involved in the said protests and named in the FIR registered in this regard. Thus, the Environics Trust is misusing the foreign contribution for stalling development projects instead of using them for the stated purpose."

The affidavit further stated that the trust “was found to be involved with Mineral Inheritors Right Association (MIRA) for protesting against Steel and Coal Projects in Odisha that are not as per the objects of the trust... Involvement of the Environics Trust with European Climate Foundation (ECF) for protesting against Thermal Power Projects in India is not as per the objects of the trust,” the IE reported.