Major victory of NDTV in money laundering case

KT NEWS SERVICE. Dated: 4/4/2020 12:59:39 AM

NEW DELHI, Apr 3: In a major relief to NDTV after five years long battle, the Supreme Court on Friday quashed the Income Tax Department notices in 2015 to reopen its accounts alleging money laundering or round tripping of Rs 1,127, holding that the cases between financial years 2006 to 2009 cannot be reopened to question raising of funds abroad in 2007 for its non-news businesses.
The judgment upholding the NDTV's appeal came on the last working day of Justice Deepak Gupta before retirement as he wrote it on behalf of the Bench which also included Justice L Nageswara Rao, holding that the income tax department can't reopen an assessment that was decided years ago.
The Bench, however, kept the door open for the department to issue fresh notice under the second proviso if otherwise permissible under law that allows the upper limit of 16 years to open the closed assessment. It held that the department cannot take NDTV by surprise at the stage of proceedings before the High Court to claim the notice be treated under the second proviso. While quashing the tax notice, the Supreme Court also clarified that it has not expressed any opinion on the facts of the case.
NDTV's case was that it was being harassed because of its independent reporting that hurt the government to defame it with the charge of money laundering. The Court held in its 32-page ruling that the income tax department cannot issue notice after four years of closure of the assessment and belatedly invoking second proviso.
The IT department had met with some initial success in the ITAT in 2015 and the Delhi High Court in 2017. Both the ITAT and the Delhi HC had held in favour of the department, upholding the notice for reassessment and the order for provisional attachment of assets.
Of particular interest to the IT department, in this case, was the issuance of Step Up Coupon Bonds by UK-based subsidiary NDTV Network Plc (NNPLC). Bonds were issued for the period between 2007 and 2012. The department had argued that NNPLC was a letterbox-company, had capital of merely Rs 40 lakh, and lacked the where with all to undertake an issuance of bonds of $100 million.
The department also red flagged how the bonds, which were due to be redeemed at the end of five years with a premium of 7.5 per cent were actually redeemed in advance at a discount of over 25 per cent. This, the taxman argued, was evidence to suggest that funds received by NNPLC were funds belonging to NDTV.
Citing these arguments, the IT department had sought to defend the tax notice seeking to open books of accounts of accounting year 2008-2009 for re-assessment and it even moved to provisionally attach assets of NDTV under Section 281B of the I-T Act.
The company, meanwhile, had argued that the transaction of step up coupon bonds was not hidden. NDTV argued that the transaction was scrutinised by the department in great detail and was approved to be a bonafide transaction.

 

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