April 4, 2020
by Rajas Salpekar
The Supreme Court on Friday quashed a notice issued by the revenue department to NDTV for exceeding time limit of 4 years. On an appeal by the media giant, a division bench comprising of Justices L Nageswara Rao and Deepak Gupta set aside an August 10, 2017 order of the Delhi High Court which had dismissed the petition of NDTV Ltd against the I-T re-assessment notice.
The IT department had issued a re-assessment notice to NDTV on discovering an amount of Rs. 642 crore not disclosed for tax assessment purpose by the media hub for the FY 2007-08. The amount, according to the Income Tax Department, was nothing but NDTV’s own undisclosed income. It has been further alleged that NDTV, by way of a scheme, had designed to re-introduce or re-route the undisclosed income over three assessment years (2007-08 to 2009-10) by layering it through various subsidiary companies with the ultimate destination being NDTV.
The Supreme Court observed that a re-assessment notice can be issued only 4 years after the assessment is completed but if the necessary information is not disclosed by the assesse (NDTV in this case), the notice can be issued 6 years after the assessment year. But, the SC having observed the complete disclosure of information, bashed the notice and barred the IT Department from using the 6 year limitation. However, the bench observed that sub-section 2 of section 147 of Income Tax sets the limit of issuing notice of re-assessment in case of involving of any foreign assets.
On contrary to NDTV’s view of praising the SC’s view and calling it a decision against the baseless claim of IT Department , the revenue department took a contrary view and held that the Apex Court only ruled on procedural grounds and the IT Dept. can still issue a notice under Section 147(2) of Income Tax Act against the UK based subsidiary of NDTV.