NewsClick Has Lot To Answer: Delhi HC As It Rejects News Portal's Plea For Stay On Income Tax Demand

The Delhi High Court has recently denied a plea by the online news portal NewsClick, seeking a halt on the income tax demand in the case of PPK Newsclick Studios Pvt Ltd v Principal Chief Commissioner of Income Tax Central Delhi and Anr.

In an order issued on 29 November, a Division Bench comprising Acting Chief Justice Manmohan and Justice Mini Pushkarna stated that NewsClick must address concerns about its financial dealings raised by the assessing officer, and no prima facie case was found in NewsClick's favour.

The court ordered, “Keeping in view the aforesaid findings, this Court is of the view that the petitioner has not been able to make out a prima facie case in its favour. To put it mildly, the petitioner has a ‘lot to answer’ in the appeal… Accordingly, the writ petition is dismissed.”

NewsClick had approached the High Court challenging orders from 3 November 2023, and 20 February 2023, passed by the Income Tax department, which dismissed NewsClick's application for a stay of demand during the appeal against the assessment order dated 30 December 2022.

The argument put forth was that the discretion to stay the demand during an appeal should be exercised judiciously, with proper consideration of relevant grounds. It was contended that the orders in this case were arbitrary, mechanical, and lacked proper application of mind.

The Court noted that although it is not mandatory to pre-deposit 20 per cent of the assessed amount to obtain a stay of deposit during the appeal filing stage, the assessing officer had provided several cogent findings against NewsClick.

The Bench highlighted the assessing officer's conclusion that the transaction between NewsClick and the foreign entity was based on 'reverse engineering' and that NewsClick's plea of financial stringency lacked confidence due to improperly maintained accounts.