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Monday, June 1, 2020
Home News Reports NDTV claims it ‘won’ the undisclosed income case in Supreme Court, but troubles are...

NDTV claims it ‘won’ the undisclosed income case in Supreme Court, but troubles are not over for them: Here is how

A fresh notice has already been issued to NDTV for a reassessment of its books, this time under the second provision of section 147 of the income tax act

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OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

On Friday, the Supreme Court of India quashed a notice by the Income Tax department alleging non-disclosure of complete income for the year 2008-09. The apex court had quashed the notice on the ground that it was filed after the limitation period was over, while the court refused to go into the merits of the allegations against NDTV.

NDTV claimed this judgement as a win for them, while others claimed that the Supreme Court has given a clean chit to the controversial media house which is facing several cases of financial irregularities. But a careful reading of the judgement reveals that this is not a complete clean chit to NDTV, and the I-T notice has been quashed on procedural grounds.

The I-T department had reopened the assessment of NDTV for 2008-09 in 2015 for an issue of coupon bonds by NDTV Network Plc., U.K., an overseas subsidiary of NDTV, amounting to US$ 100 million in July 2007. This amount was redeemed in 2009 at 72% value, which means the investors of the bonds had suffered a loss. Moreover, capital of NNPLC was very low, and it was liquidated in 2011. The department was of the view that NNPLC can’t raise such a large amount, and it actually belongs to NDTV. Therefore, the income made by NNPLC from the transaction was added to the books of NDTV, and an amount of Rs 405.09 crore was added to the assessment year 2008-09.

According to the income tax department, the amount of Rs 405 crore is nothing but NDTV’s own undisclosed income, which was re-routed to itself through its subsidiary companies.

The alleged violation took place in the assessment year 2008-09, but the assessment officer had raised the issue in 2015. The apex court held that it was outside the limitation period of six years, hence the notice was quashed as per first provision of section 147 of the income tax. The first provision says that if an assessee has made full disclosure related to incomes for an assessment year, no action can be taken after the expiry of four years from the end of that assessment year.

The Supreme Court has held that NDTV had disclosed everything that was asked by the assessment officer in the for the assessment year 2008-09, hence action can’t be taken against it under the first provision of section 147.

But the apex court has left the window open for the Income Tax department to initiate proceedings against NDTV under second provision of the second provision. The second provision says that if there is allegation that an assessee didn’t disclose about earnings made in a foreign country, then the period of limitation will be 16 years instead of 6 years for domestic income under first provision. The judgement says that the first notice issued to NDTV didn’t mention invocation of the second provision, and as the assessee can’t be taken by surprise, they must be informed under which sections actions are being taken, the notice was quashed.

Read- SAT upholds SEBI penalty of ₹2.10 crore on NDTV, ₹3 lakhs each on 3 directors for not disclosing tax demand on time

In the conclusion of the judgement, the court says, “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.”

The union finance ministry has said that the case comes under the second provision as foreign assets as involved, as it is based on funds raised by NNPLC in the UK. And accordingly, a fresh notice has already been issued to NDTV for a reassessment of its books, this time under the second provision of section 147 of the income tax act.

The Revenue Department has said that SC has not given clean cheat to NDTV. On the contrary, it has upheld saying the department’s view, that the “undisclosed income” of Rs 405.09 crore has escaped assessment, by giving it liberty to assess the same by resorting to the second provision relating to foreign assets where the limitation is extended to 16 years. The department also blamed the UPA govt for failing to take action against NDTV withing the limitation as per the first provision.

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OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

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