NEW DELHI: The Delhi High Court has dismissed news portal NewsClick's (PPK NewsClick Studio Pvt Ltd) appeal against the Income Tax Department's refusal to stay a tax demand on it during the pendency of its appeal against a demand.
The petition was filed challenging orders of the Income Tax Department dated November 3 and February 20 whereby NewsClick's stay for demand against a December 30, 2022 tax assessment order was dismissed.
Notably, NewsClick was seeking a stay only during the pendency of the appeal before the Commissioner of Income Tax (Appeals).
NewsClick also prayed the Delhi High Court for stay on the said demand during the pendency of the said tax appeal.
NewsClick argued that the orders have been passed mechanically by the Income Tax Department, without due application of mind. This is despite the fact that the discretion to stay demand during pendency of appeal is required to be exercised judiciously and reasonably.
However, finding that the Assessing Officer had passed a "cogent" order, the Delhi High Court said that to put it mildly, NewsClick has "a lot to answer".
Responding to NewsClick's argument that the Department had not used its discretion as provided for in such matters, the Court said, "Undoubtedly, the power vested under Section 220(6) of the Act, 1961 is discretionary and it is not mandatory to pre-deposit 20% of the assessed amount to obtain stay of deposit at the stage of filing the appeal before the Commissioner of Income Tax (Appeals)," however, it held that the Assessing Officer has given "cogent findings" in his order.
It said, "in the present case after analyzing a number of relevant facts, the Assessing Officer has virtually held that the transaction between the foreign entity and NewsClick was based on 'reverse engineering'."
The Court also rejected NewsClick's plea of financial stringency based on its balance-sheet stating that the same "inspires no confidence as according to the Assessing Officer, the accounts have not been properly maintained."
