NEW DELHI: The Delhi High Court has upheld the Income Tax department's decision to initiate re-assessment proceedings against media house NDTV for the assessment years 2008-09 and 2009-10, holding that the authority had reasons to believe that some transactions of those years were "bogus".
A bench of Justices S Ravindra Bhat and Najmi Waziri also refused to set aside the department's provisional attachment of the channel's immovable properties, non-current investments and tax refund, on the ground that the IT department's apprehension that NDTV may liquidate its assets was "not unwarranted".
The court had dismissed the NDTV's pleas against the reassessment proceedings and the provisional attachment order on August 10, but the 42-page judgement was uploaded today.
Upholding the provisional attachment, the bench said, "this court is of the view that a reasonable apprehension that NDTV may liquidate the assets thwarting the recovery of tax liability is not unwarranted."
On the reassessment proceedings, the court said it was of the opinion that "the complex and circuitous structure of subsidiaries and the transactions entered therein are closely connected and provide a live link for the formation of the belief of the assessing officer (AO) that there has been escapement of income in the assessment year 2009-10 and for the previous assessment year, 2008-09".
NDTV had argued that it had disclosed all transactions relevant for those assessment years (AYs) during the original assessment proceedings and therefore, there cannot be any reassessment.
Rejecting this argument, the bench said there were several judicial pronouncements which said that a disclosure of a transaction at the time of the original assessment does not protect the assessee from re-assessment if the AO has information that some of the transactions were sham or bogus.
The court noted that in the instant case, the AO had reasons to believe that some of the investments made by NDTV in foreign subsidiaries during the financial years from 200708 to 2011-12 and the amount of Rs 1127 crore received from them by the media house were sham and bogus transactions.
The AO had arrived at the opinion on the basis of tax evasion complaints allegedly moved by some shareholders of NDTV as well as the findings of the Dispute Resolution Panel, which had held that some transactions relevant for AY 2009-10 were bogus and sham and required lifting of the corporate veil, the court said.
The AO, keeping in mind the estimated position of demands that would likely to arise from the re-assessment proceedings for the AY 2008-09 and the assessment proceedings for the AY 2010-11, 2011-12, 2012-13 and 2013-14 as well as the declining net worth of NDTV, had issued the provisional attachment order, it noted.
The AO had provisionally attached the channel's immovable properties, non-current investments and refund of Rs 19.88 crore due to NDTV for the AY 2008-09.