MUMBAI: The Delhi High Court has directed the income tax (I-T) department not to take any coercive step against New Delhi Television (NDTV) in connection with its Rs 4280 million tax demand.

A bench of justices Pratibha M. Singh and S. Muralidhar said it was “satisfied” that there was a prima facie case in favour of NDTV, PTI reported. The court also issued notice to the I-T department seeking a reply on NDTV's plea challenging the demand order of 26 July and a show-cause notice of the same day. The notice had been issued for failure to pay the amount in time.

Appearing for NDTV, senior advocate Harish Salve contended that the 26 July order was based on “piecemeal assessment" and “without jurisdiction.”

The bench, pulling up the tax authority for issuing the demand order and the notice, observed that the time given for deposit of the amount was “immediately now” which seemed 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 26 July,” the court asked the I-T department.

The I-T department, in its defence, 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.

Representing the department, senior advocate Sanjay Jain argued that the plea was not maintainable and that NDTV could go in appeal against the order to the I-T commissioner.

He, however, said that the penalty notice in connection with the demand for assessment year 2009-10 would not be given effect to. He also urged the bench to direct partial deposit of the demand.

While noting the statement made on behalf of the I-T department, the court did not order partial deposit of the amount. The bench, instead, permitted the I-T department to bring up the subject on the next date of hearing on 21 August.

According to NDTV’s plea, the 26-July order was issued after the 14-July decision of the Income Tax Appellate Tribunal (ITAT), by which it had upheld the assessing officer’s decision to add around Rs 6420 million, as unexplained money, to the channel’s income for the assessment year 2009-10. But, the ITAT had remanded back three other issues pertaining to the same AY, NDTV stated, contending that there could not be a demand order for each “truncated” issue.

NDTV also said that the “unexplained money” of around Rs 6420 million 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 14 July, said the I-T department had arrived at a figure of Rs 5770 million as the income of the media house for the AY 2009-10 by taking into account losses of Rs 640 million claimed by NDTV as well as the unexplained money.