The Union government has told the Delhi High Court that the Centre for Policy Research think tank had been using foreign funds for “undesirable purposes”, The Indian Express reported on Tuesday.

The Centre stated this in an affidavit filed in response to a petition by the organisation challenging the government’s February 27 order suspending its certificate under the Foreign Contribution Regulation Act. Non-profit organisations operating in India can receive foreign funds only after they are registered under the Act.

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In the affidavit, the home ministry alleged that the Centre for Policy Research had been receiving and utilising foreign funds for purposes other than those it had registered for. It said that this came to light after the Income Tax department carried out a survey in the think tank’s offices in Delhi in September 2022, according to the Hindustan Times.

The government also claimed that an examination of the report by the Income Tax department showed that the think tank had transferred foreign funds to other entities and deposited funds in non-designated accounts, which contravened the Foreign Contribution Regulation Act.

The Union government argued that Centre for Policy Research’s actions were likely to hurt the government’s economic interest and that its violations were grave. The government said that it did not give the organisation prior notice due to this reason, and argued that the notice was not necessary under Section 13 of the Act.

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In May, Senior Advocate Arvind P Datar, appearing for the Centre for Policy Research, had argued that the Income Tax department did not furnish the entire survey report to the think tank even though it formed the basis for triggering the department’s reassessment proceedings.

Datar also argued that the amended Section 149 of the Income Tax Act – which came into force on April 1, 2022 – has been applied against his client even when the transactions in question are from 2016-’17.

Section 149(1)(b) of the Act states that in specific cases where the assessing officer has evidence that income escaping assessment amounts to Rs 50 lakh or more, notices can be sent beyond three years but not more than 10 years.