Supreme Court last week quashed the Income Tax department’s proceedings against New Delhi Television Limited (NDTV) for the reassessment of AY 2008-09 citing lapses in its process.
The court noted that it did not agree with the reasoning given by High Court regarding the non disclosure by NDTV in the cases of NDTV Labs and NDTV Lifestyle. It was of the opinion, that there was full and true disclosure of all material facts necessary for its assessment by NDTV.
It noted that the step-up coupons, entities who subscribed to the bond, and that the fact that the bonds were discounted at a lower rate was also disclosed before the assessment was finalized.
The Revenue had claimed that NDTV to avoid detection of the actual source of funds of its subsidiaries didn’t disclose the details of the subsidiaries in its final accounts, balance sheets, and profit and loss account for the relevant period. The court said it cannot be said that NDTV was bound to disclose this to the Assessing Officer.
The revenue later up came with a plea that NDTV hadn’t supplied certain documents but the court said that it could not be said that NDTV was supposed to provide all documents at the time of assessment.
The court judged that NDTV had disclosed all the primary facts necessary for the assessment of its case to the assessing officer. It noted that the revenues urge is that NDTV didn’t disclose other facts.
SC noted that it was interesting to note that before this Court the
revenue is strenuously urging that the assessee is guilty of nondisclosure of material facts, before the High Court the case of the revenue was just opposite.
The court was of the view that the revenue cannot now turn around and urge that NDTV is guilty of nondisclosure of facts. It stated that it had found that NDTV had fully and truly disclosed all material facts.
Referring to the revenues notice to NDTV on foreign income and nondisclosure of acts, it noted that it was not a fair and proper procedure. In the first notice, NDTV was not informed that the revenue relied on the second proviso. It noted that NDTV was deprived of the chance to show that it was not deriving any income from any foreign asset or financial interest in any foreign entity while replying to the notice.
It said that it was of the view that the notice and reasons given thereafter do not conform to the principles of natural justice and the assessee did not get a proper and adequate opportunity to reply to the allegations which are now being relied upon by the revenue.
It noted that the notice issued did not invoke provisions of the second proviso of Section 147 of the Act and therefore at this stage the revenue cannot be permitted to take benefit of the second proviso.
The Supreme Court concluded that the notice issued to NDTV on the part of the assessing officer had sufficient reasons but the revenue had failed to show non-disclosure of facts the notice having being issued after a period of 4 years is required to be quashed. It further made it clear that it hadn’t expressed any opinion on the facts of the case.
It noted that the revenue could issue fresh notice taking benefit of the second proviso if permissible under law.