ITAT Declines To Stay Cancellation Of Exemption Notification To Legal Initiative For Forest And Environment Trust (LIFE)

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has dismissed the stay application filed by assessee-LIFE Trust against the withdrawal/cancellation of registration for exemption granted under section 12A/12AA/12AB from FY 2013-14 onwards. The registration was cancelled on account of activities of the trust being determined to be non-genuine and not in accordance with the objects of the trust.

The bench, Kul Bharat (Judicial Member) and Brajesh Kumar Singh (Accountant Member), observed that the LIFE Trust, in association with Earth Justice, which is a USA-based organization, was involved in obstructing and stopping coal-based Indian thermal power plants and coal mine projects in India, causing irreparable loss to the nation.

The assessee, Legal Initiative for Forest and Environment' Trust (LIFE), was formed by Shri Ritwick Dutta, Shri Rahul Chaudhary, and Shri Priyabrata Satapathy on May 20, 2008. It was stated by the assessee to the PCIT during the cancellation proceedings initiated by him that it was formed with the main objective of serving environmental issues like bringing transparency and accountability in the environmental decision-making process, providing information, creating awareness by holding conferences, seminars, symposiums, conducting trainings, and capacity building of communities.

The PCIT while cancelling the registration noted that how LIFE is working and its relationship with different entities and specially Earth Justice, an organization situated in USA to show that the assessee trust was not working as per the objects of the Act. The Activities of LIFE reflected that it is making all efforts to stop coal based Indian Thermal Power Plants (TPPs) and coal mine projects. It is involved in seeking report on coal mines, TPPs and filing cases in different Indian courts. The PCIT noted that they were able to stop various mines and power projects.

Yet another reason for registration cancellation was that the PCIT noted that the LIFE and its members were aware of its illegal activities and their results and they were afraid of being caught. In one email dated 21.11.2016 Mr. Ritwick (ritwick@lifeindia.net.in) expressed to Mr. Matin Wagnerm of Earth Justice at his mail i.e. wagner@earthjustice.org) that they will be going to come under Indian intelligence organization' scanner. Mail is; 'My view is that Earth Justice is likely to be put under the scanner of Indian intelligence organization just like Sierra Club and Greenpeace. As of now the Indian Government is not much aware of Earth Justice, however, this may change if they find that there is a positive response to the call given by Earth Justice. This is my personal opinion. The actual reaction may be different. However, the probability of the above reaction is quite high.'

The PCIT while cancelling the registration noted that LIFE trust, Earth Justice, E-law, Green Peace were having active coordination on furthering litigation in India on TPPs and coal projects. The PCIT noted that Earth Justice is not litigant in India however, it is being updated on legal status of different cases related to coal mines/TPPs by LIFE. LIFE and Earth Justice are closely linked entities. In their relationship, Earth Justice seems to be master and LIFE is providing services to its master. LIFE is working at the behest of Earth Justice. Earth Justice is guiding LIFE what to do and what not to do.

The PCIT noted that in the case of LIFE Trust, a survey action was carried out by the Investigation Wing of the Income Tax Department. The materials collected during the survey were shared by the Investigation Wing with the Assessing Officer (AO), where the case was transferred under Section 127(2) from the jurisdiction of ITO (Exemption)-1(4), New Delhi.

As per the PCIT, the information was in respect of carrying out activities by the trust LIFE, which were either not as per the objects of the trust or were apparently not genuine. The PCIT, after examining the evidence, issued a show cause notice for cancellation of registration under sections 12AB (4) and 12A and 12AA. The notice was duly served upon the assessee through the declared email requiring the assessee to furnish the relevant details along with supporting documentary evidence. Another show cause notice for cancellation of registration under sections 12AB (4) and 12A and 12AA was issued.

The PCIT noted that activities of LIFE reflect that it is making all efforts to stop coal-based Indian Thermal Power Plants (TPPs) and coal mine projects. It is involved in seeking reports on coal mines, TPPs, and filing cases in different Indian courts. The PCIT noted that they were able to stop various mines and power projects.

In the Stay Petition, the assessee submitted that Legal Initiative for Forest and Environment Trust is a Charitable organization. The assessee was working for environmental causes across India. The work of the assessee in safeguarding the environment has been recognized both nationally and globally. In 2021, the assessee was awarded the 'Right Livelihood award', also known as the 'Alternate Nobel Prize', at Stockholm, Sweden. The assessee trust has always functioned with a very high degree of probity and transparency. The assessee trust had duly filed its audit returns with utmost transparency and accountability.

The assessee contended that it had fully cooperated and furnished all the information, explanations and documents as demanded in response to the show cause notices issued by the PCIT. Without considering the detailed submissions furnished during the course of the proceedings, the order under Section 12A read with section 12AA & 12AB(4) of the Income Tax Act was passed by the PCIT cancelling the registration of the assessee with retrospective effect for AY 2014-15 to AY 2022-23, and AY 2023- 2024 onwards on the ground that the activities of the assessee were not in accordance with its objects. The PCIT has adopted an arbitrary view of the operations of the assessee Trust and has cancelled the registration of the assessee on frivolous grounds without establishing any finding of omission or discrepancy in the functioning of the Trust. The assessee Trust has always genuinely carried out activities in furtherance of its main objects and has therefore filed an appeal seeking quashing of the cancellation of Registration of the Assessee Trust with retrospective effect, and restoration of the registration.

The tribunal, while rejecting the assessee's application, held that the assessee has failed to satisfy the conditions for grant of stay, i.e., a prima facie case, an irreparable loss, and balance of convenience.

Counsel For Appellant: Sachit Jolly

Counsel For Respondent: Zoheb Hussain

Case Title: Legal Initiative For Forest And Environment (LIFE Trust) Versus PCIT

Case No.: SA No.129/DEL/2024

Click Here To Read The Order