Supreme Court Dismisses Plea Of Environmental Lawyer Against Notice For Income Tax Reassessment

The Supreme Court on Monday (August 12) dismissed a petition filed by environmental lawyer Ritwick Datta challenging a notice issued by the Income Tax Department for reassessing the returns for 2019-20 AY.

The bench led by CJI DY Chandrachud comprising Justices JB Pardiwala and Manoj Misra dismissed the challenge, noting that adequate remedies are available for the petitioner at the stage of assessment proceedings itself. Datta filed the Special Leave Petition against the Delhi High Court's refusal to grant him relief.

" You will get your full remedies under the assessment proceedings...there is a full range of remedies available" the CJI remarked.  

Senior Advocate Chander Uday Singh for the petitioner argued that the reasonings given by the impugned order were 'completely malafide'. 

"It's completely malafide my lords, because they have said he has worked in the area of coal mining, has worked on environmental issues pertaining to coal, so it's anti-national" 

He submitted that the petitioner's organization Lawyers Initiative for Forest and Environment(LIFE) was served demand notices for 5-6 assessment years separately on the same set of allegations. Though the High Court has issued notice and stayed the proceedings in two such instances, it declined relief in the present case. 

"There ought to be consistency in interim orders at this stage," Singh said. 

The Counsel for the Tax authorities referred to email exchanges between the petitioner and foreign organization - Earth Justice which he contended disclosed that Earth Justice asked to put pressure on public projects relating to coal. He contended that such an activity could not be justified as a legal activity and any amount received by the petitioner from Earth Justice would not be considered as professional receipts. Thus the petitioner's Trust would be subjected to the deductions under S. 68 of the Income Tax Act as 'unexplained cash credit' of the assessee. 

"Not only will they be charged of 60% of the rate of tax because of the S.68 addition, but also the expenses would be disallowed. None of these would qualify as professional receipts considering the nature of email exchanges between Earth Justice and the assessee. There were exchanges to put foreign pressure on public projects ongoing, that cannot be construed as a litigation or legal activity, so it cannot be a professional receipt." 

S. 68 of the Income Tax Act provides that any income received by a taxpayer including credits deposited in accounts should be declared for taxation unless specifically excused by law. In the event of failure to comply with the same, the tax payer is required to explain the source of income and non-reporting. 

Singh intervened to add the present notices for reassessment were being used as pressure tactics to stop the environmental work of Dutta. 

"He is a very reputed lawyer, he is working on environmental issues, he has got an impeccable record. This is nothing but pressure tactics because he is fighting environmental issues on coal." 

Solicitor General Tushar Mehta appearing for the Union supplemented the arguments of the tax authorities by submitting that while the petitioner/assessee showed the income as fees, it had nothing to do with professional receipts since it intended to stop the ongoing public projects. 

Case Details : RITWICK DUTTA vs. DEPUTY COMMISSIONER OF INCOME TAX, SLP(C) No. 016904 - / 2024

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