The Union Ministry of Finance has issued a fresh notice in the NDTV Income Tax re-assessment case after the Supreme Court on Friday quashed the channel's reassessment for alleged round-tripping of Rs 405 crore 'unaccounted money' though its UK-based subsidiary. Though the apex court quashed the I-T Department's reassessment request while allowing it to issue a fresh notice by invoking the limitation of 16 years, as the case is related to a foreign asset.
While NDTV has called it a victory for the Prannoy Roy and Radhika Roy-promoted TV news channel, the Revenue Department calls it otherwise. "The Supreme Court has today ruled in favour of NDTV in a tax case which baselessly accused the company of money-laundering while raising funds abroad in 2007 for its non-news businesses," NDTV statement said on its website.
The Revenue Department counters by saying the SC has not given clean cheat to NDTV. On the contrary, it has upheld the government'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 another provision relating to foreign assets where the limitation is extended to 16 years.
A department source says the SC has endorsed the government's view that there are reasons to believe that for Assessment Year 2008-09, undisclosed income worth Rs 405.09 crore had escaped assessment. The source also accused the UPA government of failing to act in the limitation of 4 years.
Tax experts say the department's views are correct as NDTV has got a breather from the Supreme Court only on "technical grounds". Amit Maheshwari, Managing Partner at chartered accountancy firm Ashok Maheshwary & Associates says: "The judgment of the Apex Court relied on a settled position of law and the reassessment was quashed for exceeding the limitation period of four years. It was held that NDTV disclosed all the primary facts related to the assessment and hence the extended limitation period of six years of issuance of notice won't apply."
He points out the SC did not rule on the merits of the case but in the technicality of issuing the notice. "The revenue (department) may further issue a notice invoking the limitation of 16 years as this is a case relating to a foreign asset or interest," he says.
Reassessment of a case means reopening the already completed assessment on fulfilment of certain conditions. Under reassessment, the total income of the assessee is reassessed by including the income, which has escaped earlier assessment.
Normally, a reassessment notice can be issued up to four years after the relevant assessment year, but if the taxpayer did not disclose full income and then all material facts necessary for his assessment can be issued six years after the assessment year. However, the notice can be issued in 16 years in case of any income escaped assessment from assets abroad.
The NDTV case pertains to Rs 405.09 crore introduced in 2008-09 in the books of NNPLC, a UK-based subsidiary of NDTV. The amount, according to the Income Tax Department, was nothing but NDTV's own undisclosed income. Sources say NDTV, by way of a scheme, had designed to re-introduce or re-route the undisclosed income over three assessment years (2007-08 to 2009-10) by layering it through various subsidiary companies with the ultimate destination being NDTV.