Delhi HC quashes 2016 income tax notices to Prannoy Roy, Radhika Roy

New Delhi: The Delhi High Court on Monday quashed the 2016 income tax notices to NDTV founders Prannoy Roy and Radhika Roy and asked the department to pay Rs 1 lakh to each of them as token cost.

A bench of Justices Dinesh Mehta and Vinod Kumar observed that authorities subjecting Prannoy Roy and Radhika Roy to reassessment proceedings for the second time "practically for the same issue" was arbitrary and without jurisdiction.

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

"Impugned notice(s) dated 31.03.2016 issued to the petitioner(s), so also any consequential order(s) or proceedings pursuant thereto are quashed. No amount of cost can be treated enough for these cases, however, we cannot leave these cases without imposing any. Hence, we impose a token cost of Rs 1,00,000/- per case upon the respondents to be paid to each of the petitioners," ordered the court.

The income 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 Private Limited, the promoter entity of NDTV.

The petitioners were then shareholders and directors of RRPR.

The first round of reassessment proceedings were initiated in 2011 and ended in 2013.

On March 31, 2016, notices were issued for reassessment again on the basis of a complaint.

The High Court stayed the proceedings before the assessing officer in 2017.

In the judgment, 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.

It said the current case has not made any addition to the factual backdrop of the issue.

"Specific issue in relation to the loan received by the petitioner from RRPR had been raised, books of accounts of RRPR had been summoned/examined, and explanation was sought from the petitioner. No addition was made," the court stated.

"The respondents cannot justifiably trigger the proceedings under Section 147/148 of the (Income Tax) Act of 1961 all over again. Hurling the reassessment proceedings in such a situation hits the very root of fair adjudicatory process. Initiation of reassessment proceedings in such circumstances leads to unnecessary harassment of an assessee on the one hand and gives rise to unpredictability/uncertainty, if not anarchy, on the other," it added.

The court held that the reassessment proceedings fell foul of fundamental and constitutional rights guaranteed under Article 14 (right to equality), Article 19(1)(g) [Freedom to Practice Profession, Occupation, Trade or Business] and Article 300A (Persons not to be deprived of property save by authority of law) of the Constitution of India.