Granting interim relief to NDTV, the Delhi High Court has restricted the income tax department from taking any coercive measures against the channel after the ITAT dismissed its second appeal.
Post ITAT order, the department had come up with a Rs 428-crore demand which is according to the Court, an “over enthusiastic step” and “on the face of it illegal”.
A division bench comprising Justices S Muralidhar and Pratibha M Singh the court asked the Income Tax (I-T) department, that “how can you pass penalty order when no time has been given for payment of the amount which was determined on July 26.”
The court said it was “satisfied” that there was a prima facie case in favour of New Delhi Television (NDTV).
The court also issued notice to the IT department and sought its reply on the television channel’s plea challenging the demand order of July 26 and a show cause notice of the same day. The notice was issued for failure to pay the amount in time.
Senior Advocate Harish Salve appeared for the channel and contended that the July 26 order was “without jurisdiction” and based on “piecemeal assessment”.
The department, on the other hand, said that only a show cause notice was issued and it was in respect of two unpaid demands for 2007-08 and the one under challenge of 2009-10.
Senior Advocate Sanjay Jain, representing the department, also argued that the plea was not maintainable and the media house could go in appeal against the order to the commissioner concerned of the Income Tax department.
The IT Department had raised a demand of Rs. 218.30 crore, invoking section 69A of the Income Tax Act. It had alleged that Rs218.30 crore was the tax that was sought to be evaded on investment of Rs. 642.54 crore. It had sought a penalty of Rs. 436.8 crore at the rate of 200% of tax evaded.
However, the ITAT had dismissed the appeal with a specific finding that the channel has indulged in a clear cut case of “abuse of organization form/ legal form and without reasonable business purpose” and therefore, confirmed the order passed by the Assessing Officer.
Read the full text of the Order below.
