Delhi HC dismisses NDTV's plea against reassessment by I-T department

Moneylife Digital Team 17 August 2017

Economy & Nation

The Delhi High Court had dismissed a plea by New Delhi Television Ltd (NDTV) challenging the Income Tax department's decision to initiate re-assessment proceedings against the news company for assessment year 2008-09 and 2009-10.

While declining to grant any relief to NDTV on its plea against a provisional attachment order of the I-T department, a bench of Justices S Ravindra Bhat and Najmi Waziri, said, "This Court is of the view that a reasonable apprehension that NDTV may liquidate the assets thwarting the recovery of tax liability is not unwarranted. This court further notes the Assessment Officer (AO)’s decision not to attach the bank accounts and other trade receivables of NDTV so as to ensure unhampered operation of its business."

Citing annual reports and financial statements of NDTV, the I-T department informed the HC that the company's net worth has constantly declined over the years and has in fact declined to Rs339.42 crore, as on 31 March 2015 from Rs421.06 crore as on 31 March 2012.

The Bench noted that NDTV had created further charge on its assets without taking previous permission from the AO. "In terms of Para 10 of the provisional attachment order dated 14 September 2015, NDTV issued unconditional and irrevocable guarantee to the extent of Rs3.5 crore and Rs5 crore for obtaining a term loan from Yes Bank by its subsidiary NDTV Convergence Ltd. However, while pledging these assets, NDTV failed to seek permission from the Department as per the provisions of section 281 of the Act read with CBDT's Circular No. 4 of 2011 dated 19 July 2011. It is submitted that NDTV is aware of the Circular, because the AO had issued an advisory to the petitioner by letter no. 529 dated 1 August 2014," the HC observed.

Talking about the re-assessment proceedings against NDTV, the High Court opined that the "complex and circuitous structure of subsidiaries and the transactions entered therein are closely connected and provide a live link for the formation of the belief of the assessing officer (AO) that there has been escapement of income in assessment year 2009-10 and for the previous assessment year 2008-09".

NDTV had contended that details of the corporate guarantee issued by NDTV to NDTV Networks Plc (NNPLC) regarding its step up coupon bonds was intimated to the I-T department during the original assessment proceeding. "...mere disclosure of a transaction at the time of the original assessment proceedings does not protect the assessee from a re-assessment under Section 147 if the AO has information that indicates that the transaction is sham or bogus. This argument of NDTV falls flat in light of the judicial decisions and considering that the AO has reason to believe that this transaction is bogus. For these reasons, this Court is of the view that the impugned reassessment notice is valid in law and can be sustained," the HC said while dismissing the writ petition filed by NDTV.

We sent an email to NDTV seeking their comment on the HC order. We will update this article with NDTV’s comment as and when we receive it.

Here is the copy of the HC order...

Comments

User

Pahadi baba

8 years ago

day by day, NDTV reducing its net worth and assets have been attached by IT. NDTV is tax defaulter. No news channel is covering this story as News chennel (Media) its self following bhai bhatija vad but they (media) people show others their faulty and morality and nationality. where is this??
Moneylife - i was waiting for this from your side. keep it up.