SC decision in case of NDTV

Case Covered:

New Delhi Television Ltd.

Versus

Deputy Commissioner of  Income Tax

Facts of the case:

The appellant New Delhi Television Limited (hereinafter referred to as ‘the assessee ’) is an Indian company engaged in running television channels of various kinds. It has various foreign subsidiaries to which we shall refer in detail later on but we are concerned mainly with the subsidiary based in the United Kingdom (UK) named NDTV Network   Plc., U.K.(hereinafter referred to as ‘NNPLC’).  

The assessee submitted a return for the financial year 2007­ 08 i.e. the assessment year 2008 09  on  29.09.2008  declaring a loss. This return was processed under Section 143 of the Income Tax Act,  1961  (hereinafter referred to as  ‘the Act’). The case was selected for scrutiny and notice under Section 143(2) of the Act was issued and a  notice under  Section 142(1) of the Act was also sent to the assessee. Thereafter, the case of the assessee was taken up for consideration and the final assessment order was passed on 03.08.2012. 

Observations of the court:

In our view this is not a fair or proper procedure.  If not in the first notice, at least at the time of furnishing the reasons the assessee should have been informed that the revenue relied upon the second proviso. The assessee must be put to notice of all the provisions on which the revenue relies upon.   At the risk of repetition, we reiterate that we are not going into the merits of the case but in case the revenue had issued a notice to the assessee stating that it relies upon the second proviso, the assessee would have had a chance to show that it was not deriving any income from any foreign asset or financial interest in any foreign entity, or that the asset did not belong to it or any other ground which may be available. The assessee cannot be deprived of this chance while replying to the notice.  

Judgement of the court:

We accordingly allow the appeal by holding that the notice issued to the assessee shows sufficient reasons to believe on the part of the assessing officer to reopen the assessment but since the revenue has failed to show non­disclosure  of facts the notice having been issued after a period of 4 years is required to be quashed.   Having held so, we make it clear that we have not expressed any opinion on whether on facts of this case the revenue could take benefit of the second proviso or not. Therefore, the revenue may issue fresh notice taking benefit of the second proviso if otherwise permissible under law.  We make it clear that both the parties shall be at liberty to raise all contentions with regard to the validity of such notice. All pending application(s) shall stand(s) disposed of. ……

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