New Delhi: The Supreme Court on Friday granted interim protection for one week against any coercive action on the news portal NewsClick, which is facing an outstanding tax demand of over ₹19 crore, and gave the liberty to challenge the revenue department’s tax demand before the Delhi High Court.
A bench comprising of justices Sanjay Kumar and KV Viswanathan and headed by Chief Justice of India (CJI) Sanjiv Khanna, however, dismissed a writ petition filed by PPK Newsclick Studio Pvt Ltd directly before the Supreme Court under Article 32.
Instead, the bench, said, “We grant liberty to the petitioner to approach the Delhi high court…for a week, no coercive action shall be taken.”
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The petition was represented by senior advocates Kapil Sibal and Devadatt Kamat along with advocate Rohit Sharma.
Sibal objected to the tax demand, arguing that it was excessive and exceeded the receipts for the assessment year. The company had challenged the assessment order dated January 31, 2025, for the year 2022-23, which demanded an amount of ₹19.14 crore to be paid on or before March 2.
The portal’s founder Prabir Purkayastha was arrested in October 2023 for allegedly receiving money for “pro-China propaganda” and was charged under the Unlawful Activities (Prevention) Act, or UAPA.
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The income tax department has raised similar tax demands since the 2018-19 assessment year. In August 2024, the Supreme Court had stayed further recovery for the assessment year (AY) 2021-22, and on November 18, 2024, it ordered the de-freezing of the company’s bank account.
Pursuant to this, the petitioner firm received revenues amounting to ₹40.52 lakh. This amount has since been used to clear outstanding provident fund dues, repay loans, cover subscriptions, and settle other liabilities.
Sibal said that currently, the petitioner has a balance of ₹28 lakh, which is required to pay salaries and meet other expenses of the portal.
The petition said, “If the income tax department is able to attach the petitioner’s bank accounts and recover the amount lying in it, the petitioner organisation, which has been downsized from having 79 employees and 25 full-time consultants in December 2023, to just 7 consultants at present, will be forced to shut down.”
The income tax department had invoked Section 68 of the Income Tax Act against the petitioner for each assessment year, starting from AY 2018-19 up to the subject AY 2022-23.
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Section 68 states that if any sum is found credited in the books of an assessee for the previous year, and no explanation is provided by the assessee to the satisfaction of the assessing officer, the credited amount may be treated as the income of the assessee for that previous year and charged to income tax. As a result, all legitimately incurred expenses are considered unaccounted for, and a tax demand is raised at the penal rate of 60%, along with surcharge, etc.
NewsClick claimed to be facing tax implications equivalent to or even exceeding its gross receipts, without considering its expenses and other dues.
Sibal informed the court that all transactions are conducted through cheques via the banking channel, and there is not a single cash transaction.