Delhi HC quashes 2016 tax notices to NDTV founders Prannoy and Radhika Roy, imposes Rs 2 lakh cost on I-T dept

This was the second time they had received reassessment notices over the same issue. The earlier round of reassessment proceedings was initiated in 2011 and ended in 2013 after the assessing officer expressed satisfaction with their response to the notices.

The HC bench said, “…merely because the new incumbents in the chair feel themselves to be wiser and they hold another opinion which their predecessor did not or could not take, an already settled assessment cannot be unsettled and the petitioner cannot be made to face the rigmarole or harassment of the assessment proceedings again and again.”

The bench held that such action by the IT Department “fell foul” to the Roys’ fundamental and Constitutional rights over their property and to carry on their occupation or profession.

“The facts of the present case themselves speak volumes, as to how the proceedings are arbitrary and contrary to statutory provisions besides being against the fundamental principles of adjudicatory process,” the bench said.

The bench, while allowing the Roys’ appeals against the reassessment notices, also said: “No amount of cost can be treated enough for these cases. However, we cannot but leave these cases without imposing any. Hence, we impose a token cost of Rs 1 lakh per case upon the respondents to be paid to each of the petitioners.” With two separate petitions filed by Radhika and Prannoy respectively, the department has to pay Rs 2 lakh to them.

In its reassessment notices to the Roys in 2011, the IT department had alleged that their income escaped assessment on the grounds that a transaction of purchase of shares of NDTV Limited, a listed company, had been carried by the petitioner with RRPR at a substantially low consideration than its market value, with the loan being interest-free. The interest-free loan, according to the department, qualified to be considered as deemed income.

Subsequently, in 2013, the department issued a notice to the Roys, seeking that they show cause why the loan received by them from RRPR not be treated as income. After responding with records of the accounts, the assessing officer had expressed satisfaction and chose not to make any addition.

However, in notices issued in March 2016, the reassessment proceedings were again reopened based on a complaint. The reasons for the reassessment were provided in July 2016, which referred to the same ground of reassessment as the 2011 proceedings in effect. The Roys then moved HC, which stayed the proceedings before the assessing officer in 2017.