The Crossbill News Desk
In a significant relief to NDTV founders Prannoy Roy and Radhika Roy, the Delhi High Court has struck down income tax reassessment proceedings initiated against them, holding the exercise to be legally untenable and imposing costs on the tax department for misuse of its powers.
Setting aside the reassessment notices issued in March 2016, a division bench of Justices Dinesh Mehta and Vinod Kumar on Monday (January 19) ruled that the Income Tax Department had acted without justification.
The court directed the department to pay Rs 2 lakh as costs, awarding Rs 1 lakh each to Prannoy Roy and Radhika Roy.
As per Bar and Bench, delivering its verdict, the bench stated: “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 Rs 1 lakh to be paid by the respondents to each ft he petitioners.”
The court further held that all proceedings arising out of the impugned notices stood nullified.
The case pertained to interest-free loans extended by RRPR Holding Pvt Ltd, the promoter entity of NDTV, in which the Roys were directors and held a 50% shareholding.
The tax department had originally reopened the assessment for the 2009–10 financial year in July 2011 to examine NDTV’s share transactions and funds received from RRPR. After a detailed scrutiny, the assessing officer in March 2013 concluded that no taxable addition was warranted in respect of the loans.
Despite this finding, the department initiated a fresh round of reassessment in 2016, contending that the notional interest on the interest-free loans amounted to “deemed income” under Section 2(24)(iv) of the Income Tax Act.
The renewed action was triggered following complaints and documents received after the transfer of RRPR’s tax jurisdiction.
Aggrieved by what they termed an unlawful second reopening of the same assessment year, Prannoy Roy and Radhika Roy moved the high court in November 2017. They argued that once an assessment is reopened, the tax authority is entitled to examine all aspects of potential under-assessed income, and cannot later seek to reopen the case again on the same material. Their counsel further submitted that the 2016 notice amounted to a mere “change of opinion”, which is impermissible under settled principles of tax law, Bar and Bench reported.
The court was also apprised that reassessment proceedings against RRPR Holding Pvt Ltd are pending before the high court, with a stay on final orders. Notably, a separate bench had already quashed the reassessment notice issued to RRPR in September 2024.
Setting aside the reassessment notices issued in March 2016, a division bench of Justices Dinesh Mehta and Vinod Kumar on Monday (January 19) ruled that the Income Tax Department had acted without justification.
The court directed the department to pay Rs 2 lakh as costs, awarding Rs 1 lakh each to Prannoy Roy and Radhika Roy.
As per Bar and Bench, delivering its verdict, the bench stated: “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 Rs 1 lakh to be paid by the respondents to each ft he petitioners.”
The court further held that all proceedings arising out of the impugned notices stood nullified.
The case pertained to interest-free loans extended by RRPR Holding Pvt Ltd, the promoter entity of NDTV, in which the Roys were directors and held a 50% shareholding.
The tax department had originally reopened the assessment for the 2009–10 financial year in July 2011 to examine NDTV’s share transactions and funds received from RRPR. After a detailed scrutiny, the assessing officer in March 2013 concluded that no taxable addition was warranted in respect of the loans.
Despite this finding, the department initiated a fresh round of reassessment in 2016, contending that the notional interest on the interest-free loans amounted to “deemed income” under Section 2(24)(iv) of the Income Tax Act.
The renewed action was triggered following complaints and documents received after the transfer of RRPR’s tax jurisdiction.
Aggrieved by what they termed an unlawful second reopening of the same assessment year, Prannoy Roy and Radhika Roy moved the high court in November 2017. They argued that once an assessment is reopened, the tax authority is entitled to examine all aspects of potential under-assessed income, and cannot later seek to reopen the case again on the same material. Their counsel further submitted that the 2016 notice amounted to a mere “change of opinion”, which is impermissible under settled principles of tax law, Bar and Bench reported.
The court was also apprised that reassessment proceedings against RRPR Holding Pvt Ltd are pending before the high court, with a stay on final orders. Notably, a separate bench had already quashed the reassessment notice issued to RRPR in September 2024.
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