In a recent development, the Supreme Court of India has granted a one-week interim protection to PPK Newsclick Studio Pvt Ltd, the company operating the news portal NewsClick, against coercive actions pertaining to a tax demand exceeding Rs.19 crore. This decision offers the media outlet a brief respite to seek legal recourse from the Delhi High Court concerning the contentious tax assessment.
Background of the Case
NewsClick has been embroiled in legal challenges following a tax assessment order dated January 31, 2025, which levied a demand of Rs.19.14 crore for the assessment year 2022-23. The income tax department invoked Section 68 of the Income Tax Act, addressing unexplained cash credits, leading to this substantial tax liability. The portal contends that this demand surpasses its total receipts for the said period, raising concerns about the fairness and accuracy of the assessment.
Supreme Court’s Directive
On February 21, 2025, a bench led by Chief Justice of India (CJI) Sanjiv Khanna, along with Justices Sanjay Kumar and KV Viswanathan, declined to entertain NewsClick’s writ petition filed directly under Article 32 of the Constitution. Instead, the apex court granted the petitioner the liberty to approach the Delhi High Court for redressal. To prevent any immediate adverse actions, the Supreme Court ordered that no coercive measures be taken against NewsClick for a duration of one week, providing the portal with a window to seek appropriate legal remedies.
Financial Implications and Operational Challenges
Senior advocate Kapil Sibal, representing NewsClick, highlighted the disproportionate nature of the tax demand, emphasizing that it exceeds the portal’s actual earnings for the assessment year in question. He pointed out that the company’s bank accounts had been previously frozen, severely hampering its operational capabilities. Following a Supreme Court directive in November 2024, these accounts were unfrozen, allowing NewsClick to access Rs.40.52 lakh. These funds were allocated towards clearing outstanding provident fund dues, repaying loans, maintaining subscriptions, and addressing other financial obligations. Currently, the portal retains a balance of Rs.28 lakh, earmarked primarily for employee salaries and essential operational expenses.
The petition underscored the existential threat posed by the tax department’s actions, stating that without judicial intervention, NewsClick would be compelled to cease operations. The organization has already undergone significant downsizing, reducing its workforce from 79 employees and 25 full-time consultants in December 2023 to just seven consultants at present.
Historical Context and Ongoing Investigations
NewsClick’s legal troubles are not confined to tax disputes. In October 2023, the portal’s founder, Prabir Purkayastha, was arrested under allegations of receiving funds aimed at promoting “pro-China propaganda,” leading to charges under the Unlawful Activities (Prevention) Act (UAPA). Additionally, since the 2018-19 assessment year, the income tax department has consistently raised similar demands against the company. Notably, in August 2024, the Supreme Court intervened to stay further recovery actions for the assessment year 2021-22 and ordered the de-freezing of the company’s bank accounts in November 2024.
Next Steps
With the Supreme Court’s recent directive, NewsClick is poised to approach the Delhi High Court to challenge the Rs.19.14 crore tax demand. The interim protection from coercive actions remains in effect for one week, during which the portal aims to secure a more extended reprieve and contest the legitimacy of the tax assessment. This case underscores the intricate balance between regulatory enforcement and the operational viability of media organizations, especially those engaged in investigative journalism and reporting on sensitive issues.
