The Income Tax Department has brought attention to a growing concern regarding foreign entities funding Indian non-governmental organizations (NGOs) with potential ulterior motives. The department has pointed to a case involving Environics Trust, alleging that it has been funded significantly by foreign contributions and has misused these funds to obstruct public projects in India.

The I-T Department presented its findings to the Supreme Court while opposing a plea by Environics Trust challenging a reassessment notice for tax returns. The department's affidavit, submitted during a hearing by a Bench led by Justices Sanjiv Khanna and Dipankar Datta, highlighted key concerns regarding the trust's activities and funding sources.

The I-T Department conducted a survey of Environics Trust on September 7, 2022, leading to revelations about the trust's financial structure and operations. It was disclosed that a substantial portion of the trust's income, more than 90% according to the department, came from foreign donations amounting to Rs 14.27 crore between 2016 and 2021.

The affidavit outlined that Environics Trust, which initially registered with the aim of environmental research, community development, and advocacy, was allegedly using these funds to finance protests against development projects in India. Specifically, it mentioned protests against Steel and Coal Projects in Odisha and Thermal Power Projects across India, which were deemed contrary to the trust's stated objectives.

One striking claim made in the affidavit was that Environics Trust had allegedly hired paid protesters to demonstrate against these projects, thereby stalling progress and hindering India's economic interests. The trust's involvement with organizations such as the Mineral Inheritors Right Association (MIRA) and the European Climate Foundation (ECF) was also questioned, as it appeared inconsistent with its registered objectives.

The I-T Department's stance in court emphasized that these findings were not merely financial discrepancies but rather pointed towards a systematic effort by foreign entities to disrupt development projects in India. While the case primarily focused on tax reassessment, the department argued that these activities were relevant to assessing the trust's overall conduct and compliance with its stated goals.

Environics Trust, on its part, had approached the Delhi High Court challenging the initial notice under Section 148 of the Income Tax Act, 1961, which allows tax reassessment if there are suspicions of income evasion. The trust's response to these allegations and the ongoing legal proceedings will likely shed more light on the intricacies of this complex case.

The broader implications of such allegations extend beyond Environics Trust to the regulatory framework governing foreign contributions to Indian NGOs and their accountability in utilizing these funds transparently. 

Case:  Environics Trust Vs. The Dept Commissioner of Income Tax.