Repeated IT Reassessment Against NDTV Founders Radhika Roy and Prannoy Roy Amounts To Harassment: Delhi High Court

The Delhi High Court has observed that repeatedly reopening income tax assessments against NDTV founders Radhika Roy and Prannoy Roy for the same year amounted to their "unnecessary harassment"

A Division Bench of Justice Dinesh Mehta and Justice Vinod Kumar made the observation while dealing with reassessment proceedings initiated by the Income Tax Department for the Assessment Year 2009–10.

The court said such action “hits the very root of fair adjudicatory process” and creates “unpredictability/uncertainty, if not anarchy.”

The case relates to the Roys' income tax returns for 2009–10. Both were 50 percent shareholders and directors of RRPR Holding Pvt. Ltd. and had declared income of about Rs. 1.66 crore, which was accepted by the department.

In 2011, the department reopened the assessment, questioning transactions involving NDTV shares and interest-free loans received from RRPR.

During those proceedings, the Assessing Officer summoned RRPR's books of accounts, examined the loan transactions in detail, and sought explanations from the Roys. The reassessment was completed in March 2013 without making any addition on the issue of the loans.

Nearly three years later, the department issued fresh notices for the same assessment year, this time proposing to tax notional interest on the same interest-free loans by invoking another provision of the Income Tax Act.

Senior Advocate Sachit Jolly, appearing for the Roys, argued that the issue had already been examined earlier and that reopening the assessment again on the same transaction was nothing but a change of opinion, which the law does not allow.

Accepting this, the High Court said the department could not keep reopening a settled assessment simply because it wanted to look at the same transaction from a different angle.

“The respondents cannot justifiably trigger the proceedings under Section 147/148 of the Act of 1961 all over again,” the bench said.

The court also rejected the department's claim that the extended six-year limitation period applied due to alleged failure by the Roys to disclose material facts.

It noted that the audited books of accounts, balance sheets, and details of the interest-free loans were already on record during the earlier reassessment.

“It cannot be said that the petitioner had failed to disclose true and material facts before the Assessing Officer,” the bench observed, holding that invoking the extended period of limitation was “absolutely baseless” and rendered the reassessment “fundamentally and inherently without jurisdiction.”

Calling the second reopening arbitrary and unconstitutional, the court said it violated the Roys' rights under Articles 14, 19(1)(g) and 300A of the Constitution.

"In the instant case, subjecting the petitioner to reassessment proceedings second time for the selfsame transaction and practically for the same issue is arbitrary and without jurisdiction. They fall foul to petitioner's fundamental and constitutional rights guaranteed under Article 14, Article 19(1)(g) and Article 300A of the Constitution of India", it said. 

The High Court quashed the reassessment notices and imposed token costs of Rs. 1 lakh each on the Income Tax Department, payable to Radhika Roy and Prannoy Roy.

Case Title: Radhika Roy v. Deputy Commissioner of Income Tax

Case Number: W.P.(C) 10527/2017

Counsel for Petitioner: Senior Advocate Sachit Jolly, with Advocates Viyushti Rawat, Devansh Jain and Sarthak Abrol

Counsel for Respondent: Spl. Counsel N. P. Sahni, with Indruj Singh Rai, SSC, Sanjeev Menon, JSC, Rahul Singh, JSC and Advocate Gaurav Kumar

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