The Delhi High Court on Tuesday directed the Income Tax department not to take any coercive step against media house New Delhi Television (NDTV) in connection with a Rs 428- crore demand raised by the authority.
A bench of justices S Muralidhar and Pratibha M Singh said it was "satisfied" that there was a prima facie case in favour of 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, appearing for NDTV, contended that the July 26 order was "without jurisdiction" and based on "piecemeal assessment".
Pulling up the tax authority for issuing the demand order and the notice, the bench noted that the time given for deposit of the amount was 'immediately now' which appeared to be an "over enthusiastic step" and "on the face of it illegal".
"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 asked the I-T department.
In its defence, the department contended 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.
He, however, said that the penalty notice with regard to the demand for assessment year 2009-10 would not be given effect to.
He also urged the bench to direct partial deposit of the amount demanded.
The court, while noting the statement made on behalf of the department, did not order partial deposit of the amount.
The bench, instead, allowed the department to raise the issue on the next date of hearing on August 21.
According to NDTV's plea, the July 26 demand order was issued after the July 14 decision of the Income Tax Appellate Tribunal (ITAT) by which it had upheld the assessing officer's decision to add around Rs 642 crore, as unexplained money, to the channel's income for the assessment year (AY) 2009-10.
But, the ITAT had remanded back three other issues pertaining to the same AY, NDTV has said, contending that there could not be a demand order for each "truncated" issue.
The media house has also said that the "unexplained money" of around Rs 642 crore was in fact an investment made by NBC Universal Inc through its subsidiary Universal Studio International BV.
The petition, subsequent to the ITAT order of July 14, said the IT department had arrived at a figure of Rs 577 crore as the income of the media house for the AY 2009-10 by taking into account losses of Rs 64 crore claimed by the channel as well as the unexplained money.
Based on the figure of Rs 577 crore income, the department had calculated that a tax of Rs 428 crore was payable, the plea has said.
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