The Delhi High Court on Monday set aside the income tax reassessment proceedings initiated against NDTV founders Prannoy Roy and Radhika Roy, holding that the notices were legally unsustainable and amounted to an impermissible second reopening of completed assessments.
The Division Bench of Justice Dinesh Mehta and Justice Vinod Kumar quashed the reassessment notices issued on March 31, 2016, along with all consequential proceedings arising therefrom.
It further imposed costs of Rs two lakh on the Income Tax Department for pursuing a ‘fundamentally flawed’ exercise of jurisdiction. Noting that no amount of costs could adequately compensate taxpayers subjected to such proceedings, the High Court directed the department to pay token costs of Rs one lakh each to Prannoy Roy and Radhika Roy.
The impugned proceedings related to alleged tax implications arising from certain interest-free loans advanced to RRPR Holding Private Limited, the promoter entity of NDTV.
The reassessment notices had been issued under the Income Tax Act, 1961, several years after the relevant assessment year had already been reopened and concluded by the Department.
The petitioners had approached the High Court in November 2017, contending that the reassessment proceedings constituted a second reopening for the same assessment year, which is barred in law in the absence of fresh tangible material. They pointed out that the Revenue had earlier reopened the assessment in July 2011, during which the very same transactions relating to interest-free loans were examined in detail, culminating in a reassessment order passed in March 2013.
Challenging the stand of the Assessing Officer that the earlier reassessment was limited in scope, the petitioners argued that once jurisdiction under Section 147 of the Income Tax Act was validly assumed, the assessing authority was empowered to examine the entire spectrum of under-assessed income.
They further submitted that the second reopening was founded on a mere change of opinion, which is impermissible under settled law, as consistently held by the Supreme Court in decisions such as Commissioner of Income Tax v. Kelvinator of India Ltd. and subsequent authorities.
The Court was also apprised that analogous reassessment proceedings initiated against RRPR Holding Pvt. Ltd. were already under scrutiny before the High Court, where interim protection against final orders had been granted. Notably, a coordinate Bench had quashed the reassessment notice issued to RRPR Holding in September 2024, reinforcing the petitioners’ case of jurisdictional overreach by the Revenue.
Allowing both writ petitions, the Bench conclusively held that the reassessment notices and all actions flowing from them were liable to be struck down. A detailed judgment is awaited.
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