The Delhi High Court on Monday quashed the income tax reassessment notices issued to NDTV founders Prannoy Roy and Radhika Roy in March 2016 over certain interest-free loans advanced by RRPR Holding, the promoter of NDTV.
A Division Bench of Justices Dinesh Mehta and Vinok Kumar also slapped costs of ₹2 lakh on the Income Tax Department for issuing the notice
It said that while no amount of cost can be enough in these cases, the Income Tax Department must pay a token cost of ₹1 lakh each to Prannoy Roy and Radhika Roy.
“As a conclusion to the foregoing discussion, both the writ petitions are allowed. Notices dated March 31, 2016, issued to the petitioners and any consequent order or proceedings thereto are quashed. No amount of cost can be treated as enough for these cases. However, we cannot leave these cases without imposing any. Hence, we impose a token cost of ₹1 lakh to be paid by the respondents to each ft he petitioners," the Court ordered.
It further said that all consequent proceedings initiated pursuant to the notices will also be quashed.
The High Court also took exception to the "harassment" meted out to the NDTV founders by the IT Department over an interest-free loan advanced by RRPR Holding (promoter of NDTV).
The Division Bench said that the IT Department reopening the tax reassessment proceedings against Roys gave rise to uncertainty and anarchy.
The Court further observed that when the reassessment proceedings were initiated the first time in 2011, the books of accounts of RRPR (promoter of NDTV) had been summoned/examined, explanation was sought from the Roys, and no addition was made to the income.
Therefore, the tax authorities cannot trigger the proceedings all over again, and hurling the reassessment proceeding in such situation hits at the very root of fair adjudicatory process, the Court said.
“Initiation of reassessment proceedings in such circumstances, leads to unnecessary harassment of an assessee on the one hand and give rise to unpredictability/uncertainty, if not anarchy on the other,” the Court observed.
The case stemmed from interest-free loans given by RRPR Holding Pvt Ltd to Roys. The Income Tax Department first reopened their assessments for the assessment year 2009–10 in 2011, examined the NDTV share transactions and loans, and completed reassessment in March 2013 without making additions.
In 2016, fresh notices were issued proposing to tax notional interest on the loan as deemed income. Prannoy Roy and Radhika Roy challenged this second reopening as an impermissible change of opinion. They also cited related proceedings against RRPR, where reassessment notices were quashed in 2024.
In a detailed judgement, the High Court today said that the reopening of the reassessment proceedings by using the extended limitation period was arbitrary and contrary to the Income Tax Act.
The Court added that proceedings like these cannot be countenanced by constitutional courts and violate Roys’ fundament rights.
“In the instant case, subjecting the petitioner to reassessment proceedings second time for the selfsame transaction and practically for the same issue is arbitrary and without jurisdiction. They fall foul to petitioner’s fundamental and constitutional rights guaranteed under Article 14, Article 19(1)(g) and Article 300A of the Constitution of India,” the Court added.
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