Case Law Details
Oxfam India Vs DCIT (Delhi High Court)
Introduction: Oxfam India, a leading non-profit organization, has found itself in the midst of a legal tangle concerning the Income Tax Act of 1961. The Delhi High Court has recently stepped in to halt the reassessment proceedings initiated against the organization.
Background of the Case: The conflict originates from various notices and orders issued to Oxfam India. Primarily, these were centered around:
- A notice under Section 148A(b) of the Income Tax Act, 1961.
- An order under Section 148A(d) of the same Act.
- A consequential notice under Section 148 of the Act.
The Trigger for Reassessment: Oxfam India underwent a survey on 7th September 2022. This survey sparked the reassessment proceedings. Furthermore, the petitioner had been registered under Section 12AA of the Act since the Assessment Year (AY) 2008-09.
Allegations Against Oxfam India: The reasons given for the initiation of the reassessment proceedings included allegations such as:
- Engaging in litigation activities violating the FCRA.
- Receiving questionable contributions from foreign nationals.
- Failure to recognize revenue amounting to Rs.15,09,85,211 as advances for future projects.
- Not utilizing 85% of its total receipts towards its objectives.
Petitioner’s Defense: Oxfam India refutes the claims, asserting that:
- The contributions received from foreign nationals are legitimate, with complete details and names provided.
- The figure of Rs.15,09,85,211 was an advance for future projects and shouldn’t be recognized as income for the said period.
Legal Submissions: Two pivotal legal arguments were put forth:
- The survey report was never shared with Oxfam India.
- The proceedings against Oxfam were barred by limitation.
Another critical point raised was the non-applicability of the amendment in Section 149(1)(b) of the Act to Oxfam India.
Similar Cases: It was noted that similar issues are being considered in another writ petition titled “Centre for Policy Research v. Deputy Commissioner of Income Tax.”
Future Directions: For now, the Delhi High Court has stayed the reassessment proceedings against Oxfam India. The matter is listed for 22nd November 2023, where further discussions and evaluations are expected.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Allowed, subject to the petitioner filing legible copies of the annexures, at least three days before the next date of hearing.
W.P.(C) 10227/2023 & CM No.39588/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. This writ petition concerns Assessment Year (AY) 2016-17.
3. Via this writ petition, a challenge has been laid by the petitioner to the following notices and orders:
(i) Notice dated 29.03.2023 issued under Section 148A(b) of the Income Tax Act, 1961 [in short, “Act”].
(ii) Order dated 19.04.2023 passed under Section 148A(d) of the Act.
(iii) Consequential notice dated 19.04.2023 issued under Section 148 of the Act.
4. The record shows that a survey was conducted on 07.09.2022. The survey led to initiation of the reassessment proceeding.
5. The petitioner has averred that it stands registered under the provisions of Section 12AA of the Act since AY 2008-09.
5.1 It is also the petitioner’s case that an assessment order dated 02.12.2018 was framed under Section 143(3) of the Act.
6. It appears that in the Return of Income (ROI) for the relevant AY, the petitioner had claimed deductions under Section 12A read with Section 11 of the Act.
7. A notice dated 29.03.2023 issued under Section 148A(b) of the Act, which triggered the reassessment proceeding against the petitioner, broadly, adverted to the following aspects:
(i) First, the petitioner was engaged in litigation activities which were violative of Section 8(1) of the Foreign Contribution (Regulation) Act, 2010 [in short, “FCRA”].
(ii) Second, it had received suspicious contribution from foreign nationals.
(iii) Third, it failed to recognize as revenue Rs.15,09,85,211/-, which was received as advances against future projects.
(iv) Fourth, the petitioner had not applied 85% of its total receipts towards its objects in the relevant period, as required under the provisions of the Act.
8. We may note that the last aspect (i.e., that the petitioner had not utilized 85% of its receipts towards its stated objects) does not form part of the order passed under Section 148A(d) of the Act.
9. The petitioner says that the charge levelled against it, that it has received contributions from foreign nationals which were suspicious, is misconceived as the details and names of contributors were provided.
10. Furthermore, the petitioner also takes the stand that the Assessing Officer’s (AO) assertion that Rs.15,09,85,211/- should have been recognized as income is completely misconceived, as these were advances which had to be utilized for future objects, and therefore was not income which arose, in the period in issue.
11. We may note that there are, inter alia, two legal submissions that have been advanced before us by Mr Arvind P. Datar, learned senior counsel, assisted by Mr Sachit Jolly and Ms Disha Jham, who appear on behalf of the petitioner/assessee.
11.1 First, the respondents/revenue did not share the survey report with the petitioner.
11.2 Second, the proceeding initiated against the petitioner were barred by limitation.
12. Besides this, Mr Datar has also submitted that an amendment brought about in Section 149(1)(b) of the Act pursuant to the Finance Act, 2022 would not be applicable to the petitioner, as that amendment would be applicable only from AY 2022-23.
13. It is pointed out by Mr Datar that somewhat similar issues are being considered by this court in another writ petition, i.e., W.P.(C)No.7190/2023, titled Centre for Policy Research v. Deputy Commissioner of Income Tax, Central Circle 14 & Anr.
14. We may note that Mr Vipul Agrawal, learned senior standing counsel, who appears on behalf of the respondents/revenue, has submitted that the petitioner’s FCRA licence has run into rough weather, and that the petitioner is agitating its rights in this court, before another Bench.
14.1 In this behalf, our attention has been drawn to the fact that the petitioner has filed a writ action, i.e., W.P.(C)No.1771/2023. We are told that this writ petition is pending before the learned single judge of this court and that, for the moment, no interim relief has been granted to the petitioner.
14.2 Mr Datar, along with Mr Jolly and Ms Jham, do not dispute this fact.
15. According to us, the matter requires further examination.
16. Accordingly, issue notice.
16.1 Mr Vipul Agrawal, learned senior standing counsel, accepts notice on behalf of the respondents/revenue.
17. A counter-affidavit will be filed within the next six (6) weeks.
17.1 Rejoinder thereto, if any, will be filed at least five days before the next date of hearing.
18. List the matter on 22.11.2023.
19. In the meanwhile, there shall be a stay on the continuation of the reassessment proceeding, till further directions of the court.
20. Parties will act based on the digitally signed copy of the order.
