The Delhi High Court, in a significant relief to Prannoy Roy and Radhika Roy, founders of New Delhi Television Ltd. (NDTV), has set aside income tax reassessment notices issued in connection with a financial transaction involving RRPR Holdings Pvt. Ltd.
A Division Bench comprising Justice Dinesh Mehta and Justice Vinod Kumar held that the Income Tax Department acted improperly by reopening the assessment on issues that had already been examined and concluded in an earlier assessment cycle. The Court observed that such action amounted to an impermissible "change of opinion" under the Income Tax Act.
Court Imposes Costs on Income Tax Department
While allowing the petitions filed by the Roys, the High Court imposed costs of Rs 2 lakh on the Income Tax Department, directing it to pay Rs 1 lakh each to Prannoy Roy and Radhika Roy.
Background of the Case
The dispute relates to interest-free loans advanced to RRPR Holdings Pvt. Ltd. In July 2011, the Income Tax Department issued reassessment notices to the NDTV founders for the Assessment Year 2009-10. Following this, a reassessment order was passed in March 2013, effectively settling the matter.
Despite the earlier scrutiny, the department issued fresh reassessment notices in March 2016 for the same assessment year, seeking to reopen the case on identical grounds. The Roys challenged these notices before the Delhi High Court in November 2017, contending that reopening an already examined issue violated settled principles of tax law.
Key Legal Takeaway
The High Court reaffirmed that reassessment proceedings cannot be initiated merely to review or revisit concluded matters, emphasising that reopening assessments on the same material constitutes an unlawful change of opinion.
The ruling reinforces safeguards available to taxpayers against repeated reassessment on identical issues and underscores the limits of the Income Tax Department’s powers under the reassessment framework.
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