On Friday, the Supreme Court granted interim protection to the news portal NewsClick, shielding it from any coercive action by tax authorities for one week regarding an outstanding tax demand of over ₹19 crore. The bench, led by Chief Justice of India Sanjiv Khanna and comprising Justices Sanjay Kumar and KV Viswanathan, also allowed NewsClick to challenge the tax demand before the Delhi High Court.
The legal representation for PPK Newsclick Studio Pvt Ltd included senior advocates Kapil Sibal and Devadatt Kamat, alongside advocate Rohit Sharma. Sibal argued that the tax demand was unjustifiably high, surpassing the portal’s receipts for the assessment year 2022-23. The disputed assessment order issued on January 31, 2025, demands the hefty sum be paid by March 2.
This legal skirmish follows after NewsClick’s founder, Prabir Purkayastha, faced arrest in October 2023 under the Unlawful Activities (Prevention) Act for allegedly engaging in “pro-China propaganda.”
The Income Tax Department has consistently raised similar tax demands against the portal since the 2018-19 assessment year. Notably, the Supreme Court had previously intervened in August 2024 to stay further recovery for the 2021-22 assessment year and subsequently ordered the unfreezing of the company’s bank account in November 2024.
Following the unfreezing, NewsClick managed to secure revenues of ₹40.52 lakh, which were allocated towards clearing provident fund dues, repaying loans, and covering other operational costs. However, with a remaining balance of only ₹28 lakh, Sibal emphasized the precarious financial state of the organization, highlighting that such funds are crucial for meeting payroll and other essential expenses.
The petition expressed a grave concern that if the Income Tax Department were to seize the remaining funds in the petitioner’s bank accounts, it could potentially lead to the shutdown of NewsClick, which has already significantly downsized its staff from 79 employees and 25 consultants in December 2023 to just 7 consultants currently.
Under Section 68 of the Income Tax Act, the department has treated the credited amounts in NewsClick’s books without adequate explanation as taxable income, levying a penal tax rate of 60%, along with applicable surcharges.
