Delhi High Court on Monday quashed the 2016 income-tax notices to NDTV founders Prannoy Roy and Radhika Roy, calling them “arbitrary”, and told the department to pay ₹1 lakh to each as a token cost.
The tax notice pertained to the reassessment of the petitioners’ income for the year 2009-10 on account of certain “interest-free” loans received by them from RRPR Holding Pvt Ltd, the then promoter of NDTV. The petitioners were shareholders and directors of RRPR. The first round of reassessment proceedings was initiated in 2011 and ended in 2013.
A division bench of Justices Dinesh Mehta and Vinod Kumar imposed a fine of ₹2 lakh on the income-tax department as a token cost for issuing the notice. “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 ₹1,00,000 per case upon the respondents to be paid to each of the petitioners (the Roys),” the court said.
Referring to the IT notice as “arbitrary and without jurisdiction”, the court also held that “they (notices) fall foul of the petitioners’ fundamental and constitutional rights guaranteed under Article 14, Article 19(1)(g) and Article 300A of the Constitution
of India”.
“The facts of the present case themselves speak volumes as to how the proceedings are arbitrary and contrary to the statutory provisions, besides being against the fundamental principles of adjudicatory process. In the facts of the case though, no judicial precedents or pronouncements are required to quash the impugned proceedings,” the court said.
The court disagreed with the IT department that the Roys had failed to disclose true and material facts before the assessing officer. “Invocation of the extended period of limitation on the ground that the petitioner failed to disclose material facts is thus absolutely baseless. Consequently, issuance of the notice is clearly contrary to Section 149 of the Act of 1961 and thus fundamentally and inherently without jurisdiction,” the court said.
Contending that the reinitiation of the assessment proceedings is arbitrary and vindictive, the counsel for the Roys argued that the power of the tax department had been exercised illegally.
The court also quashed any consequential order or proceedings pursuant to the March 31, 2016, notice. Notices were issued in 2016 for reassessment on the basis of a complaint. The high court stayed the proceedings before the assessing officer in 2017.
The court observed that no new fact was revealed by the “so-called complaint”, and the assessing officer was aware of the facts when the order was passed in 2013.