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

The Delhi High Court on Monday quashed income tax reassessment notices issued in 2016 to NDTV founders Prannoy Roy and Radhika Roy, holding that the proceedings were arbitrary and without jurisdiction, and directed the Income Tax Department to pay Rs 1 lakh each to the petitioners as token costs.

A division bench of Justices Dinesh Mehta and Vinod Kumar observed that subjecting the Roys to reassessment proceedings for a second time on substantially the same issue violated statutory provisions and fundamental principles of fair adjudication.

“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 court said while allowing the petitions filed by the Roys.

Quashing the notices dated 31 March 2016 and all consequential proceedings, the bench said that while no amount of costs could fully compensate the harassment caused, the court deemed it appropriate to impose a token cost of Rs 1,00,000 per case on the tax department.

The reassessment notices pertained to the assessment year 2009–10 and were issued in connection with alleged “interest-free” loans received by the Roys from RRPR Holding Private Limited, the promoter entity of NDTV, where both were shareholders and directors at the relevant time.

The court noted that the issue had already been examined in an earlier round of reassessment proceedings initiated in 2011, which concluded in 2013.

During those proceedings, the assessing officer had raised specific queries regarding the loans, summoned and examined the books of accounts of RRPR, and sought explanations from the petitioners. No additions were made to their income at that stage.

Despite this, fresh reassessment notices were issued in March 2016 based on a complaint. The High Court had stayed the reassessment proceedings in 2017.

In its judgment, the court held that the so-called complaint did not bring any new material to light and that all relevant facts were already within the knowledge of the assessing officer when the earlier assessment order was passed in 2013.

“The present case has not made any addition to the factual backdrop of the issue,” the bench said, adding that reopening the assessment amounted to impermissible review of a concluded proceeding.

The court observed that repeatedly triggering reassessment proceedings in such circumstances “hits the very root of fair adjudicatory process” and leads to unnecessary harassment of taxpayers while creating uncertainty and unpredictability in tax administration.

The bench further held that the reassessment proceedings violated the petitioners’ constitutional rights under Article 14 (right to equality), Article 19(1)(g) (freedom to practise any profession or carry on any occupation, trade or business), and Article 300A (right to property) of the Constitution.

With these observations, the court allowed the petitions and set aside the reassessment notices and all actions taken pursuant to them.