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Delhi High Court slams IT department in NDTV case, says no coercive action against channel

NEW DELHI: Delhi High Court on Tuesday told the income tax department not to take any coercive step against NDTV in connection with a penalty of Rs 428 crore and censured it for asking the media house to pay “immediately”. It described the move as “over-enthusiastic” and “on the face of it illegal”.

“How can you pass a penalty order when no time has been given for payment of the amount, which was determined on July 26?” a bench of Justices S. Muralidhar and Pratibha M. Singh asked the income tax department.

The court said it was “satisfied” that there was a prima facie case in favour of NDTV. It also issued a notice to the income tax department and sought its reply on the television channel’s plea challenging the issuance of the penalty order and a showcause notice on the same day for failure to pay on time.

Appearing for NDTV, senior advocate Harish Salve contended that the July 26 order was “without jurisdiction” and based on “piecemeal assessment”.

Pulling up the tax department for issuing the demand order and the notice on the same day, the high court noted that the time given for depositing the amount was “immediately now”, which appeared to be an “over-enthusiastic step” and “on the face of it illegal”.

In its defence, the department contended that the showcause notice pertained to two unpaid demands dating back to 2007-08 and 2009-10.

Senior advocate Sanjay Jain, representing the department, also argued that NDTV’s plea was not maintainable and the media house could appeal against the order to the income tax commissioner concerned.

He, however, said the penalty notice with regard to the demand for the 2009-10 assessment year would not be given effect to. Jain also urged the court to direct partial deposit of the amount demanded.

The court, while noting the statement made on behalf of the department, did not order partial deposit of the amount. It instead allowed the department to raise the issue on the next date of hearing on August 21.

According to NDTV’s plea, the July 26 demand order was issued after the July 14 decision of the Income Tax Appellate Tribunal upholding the assessing officer’s decision to add around Rs 642 crore, as unexplained money, to the channel’s income for the assessment year 2009-10.

But the tribunal had sent back three other issues pertaining to the same assessment year, NDTV had said, contending that a demand order could not be issued in a “truncated” manner.

The media house had also said that the “unexplained money” of around Rs 642 crore was in fact an investment made by NBC Universal Inc through its subsidiary Universal Studio International B.V.

The NDTV petition, subsequent to the tribunal order, had said the income tax department had arrived at a figure of Rs 577 crore as the income of the media house for the assessment year 2009-10 by taking into account losses of Rs 64 crore claimed by the channel as well as the unexplained money.

Based on the income figure, the department had calculated that a tax of Rs 428 crore was payable, the plea had said.

(With PTI inputs)