The Delhi High Court on Monday set aside the income tax reassessment notices issued to NDTV founders Prannoy Roy and Radhika Roy in March 2016. These notices were related to certain interest-free loans given by RRPR Holding, the promoter company of NDTV. A Division Bench of Justices Dinesh Mehta and Vinok Kumar also imposed a cost of Rs 2 lakh on the Income Tax Department for issuing the notices, according to a report by Bar and Bench.
The court said that while no amount of cost can truly compensate in such cases, the department must still pay a token amount. It directed the Income Tax Department to pay Rs 1 lakh each to Prannoy Roy and Radhika Roy, the report mentioned.
“As a conclusion to the foregoing discussion, both the writ petitions are allowed. Notices dated March 31, 2016, issued to the petitioners and any consequent order or proceedings thereto are quashed. No amount of cost can be treated as enough for these cases. However, we cannot leave these cases without imposing any. Hence, we impose a token cost of ₹1 lakh to be paid by the respondents to each of the petitioners,” the court ordered.
All related proceedings also quashed
The High Court further clarified that all proceedings started on the basis of these notices will also stand cancelled. The case relates to interest-free loans given by RRPR Holding Pvt Ltd, a company in which Prannoy and Radhika Roy were directors and held a 50 per cent shareholding.
Earlier, the Income Tax Department had reopened assessments in 2011 for the assessment year 2009–10. During that process, it examined transactions linked to the buying and selling of NDTV shares, as well as the loans received from RRPR. After detailed scrutiny, the assessing officer did not make any additions related to the interest-free loans and completed the reassessment in March 2013, the report said.
However, in 2016, the department issued fresh reassessment notices. This time, it proposed to treat the notional interest on the loans as “deemed income” under Section 2(24)(iv) of the Income Tax Act, citing complaints and records received after RRPR’s jurisdiction was transferred.
When Roys approach high court in 2017
Prannoy and Radhika Roy moved the High Court in November 2017, challenging the notices. They argued that the reassessment amounted to reopening the same assessment year for the second time.
It was submitted that the department had already reopened the assessment in July 2011 and had examined the same issues in detail, which ended with a reassessment order in March 2013.
The Roys also challenged the assessing officer’s claim that the earlier reassessment was limited in nature. They argued that once reassessment begins, the entire under-assessed income can be examined. They further said that reopening the same issue again was merely a “change of opinion,” which is not allowed under the law, as per the report.
The court was also told that similar reassessment proceedings against RRPR Holding Pvt Ltd are pending before the High Court, where a stay on final orders has already been granted. The notice issued to RRPR was quashed by another bench of the High Court in September 2024.