New Delhi: The Supreme Court on Friday quashed a notice sent by the income tax (I-T) department to media company NDTV, which sought a re-assessment of the company’s income for the 2006-2007 financial year.
The apex court dismissed the notice – which had alleged round-tripping of money by the news TV channel – and as a result also overturned an earlier order of the Delhi High Court that had permitted the reassessment of NDTV’s income for that year.
The tax case relates to the $100 million that was raised by Network PLC (NNPLC), a London-based subsidiary of NDTV. This fundraising came under the scanner of the I-T department, which has alleged that the money raised was actually NDTV’s own funds and thus a case of alleged money-laundering.
Consequently, the tax department feels that these actions warranted a re-assessment of the NDTV’s tax liability for that year.
Also read: Bombay High Court Sets Aside SEBI Order Against NDTV
“… Assessing officer was of the opinion that there were reasons to believe that the funds received by NNPLC were the funds of the assessee [NDTV] under a sham transaction and that the amount of Rs 405.09 crores introduced into the books of NNPLC during the financial year 2007-08 corresponding to the assessment year 2008-09 through the transaction involving the step-up coupon convertible bonds pertains to the assessee [NDTV],” the apex court’s court order notes.
In its order, the Supreme Court however held that there had been “no non-disclosure of material facts” by NDTV as claimed by the tax department in this case.
It also held held that these notices, which were issued in 2015, were time-barred and hence unsustainable.
“…We find that the assessee (NDTV) had fully and truly disclosed all material facts necessary for its assessment and, therefore, the revenue cannot take benefit of the extended period of limitation of six years,” said the order, which is authored by Justice Deepak Gupta.
However, the apex court’s order notes that the I-T department is free to issue a fresh notice to NDTV under a separate rule that allows it to re-open assessment of firms up to 16 years later if it is found that the assessee has derived income from a foreign entity.
In a statement put out on Friday evening, NDTV noted that the Supreme Court had shown that the “rule of law prevails above all else”.
“The Supreme Court has refused to allow the Revenue Department to reopen an assessment that was decided years ago. Tax officials had sought this in 2015 alleging that NDTV had concealed facts and round-tripped money. The court today has disallowed that,” the channel said.
Tax Department Notice to NDTV by The Wire on Scribd