NDTV: Media has erred, charges of money laundering against channel are false; I-T Dept distorting ITAT verdict

On Sunday, NDTV  accused some media outlets of misreporting a recent Income Tax Appellate Tribunal (ITAT) order which upheld a tax demand raised on $150 million investment by a US television network in NDTV in 2008.

On Sunday,  Deccan Chronicle  reported that the ITAT ruling stated that the Ministry of Corporate affairs had, in 2009, colluded with NDTV founder Prannoy Roy and hid certain information related to shell companies set up by the news media firm to launder Rs 642 crore.

The ruling stated that NDTV and its promoters laundered around Rs 1,100 crore during 2007 to 2010 and that the tax appellate authority confirmed that Rs 642 crore out of the total amount of laundered money was black money, Deccan Chronicle reported.

According to a report in  DNA , the ITAT order, which ran into 385 pages, stated: “The real nature of the transaction was actively and deliberately concealed under a thorough, methodical and calculated planned strategy”.

After analysing the various subsidiaries and internal mails, ITAT documents suggested that NDTV made a “conscious, deliberate and well-planned attempt to conceal particulars of income,” DNA reported.

NDTV states in its press release: “These media reports are quoting from a press release by the Income Tax Department which not just distorts the verdict, but outright lies about it. NDTV is appealing in the Delhi High Court against the verdict.”

NDTV added: _"_We also reiterate that contrary to what the malevolent press release of the I-T Department says, the ITAT has refused to accept the allegation of the I-T department that there was any money-laundering by NDTV or Dr Prannoy Roy (this is clearly mentioned in para 103 of its judgment). In fact, in its order, ITAT specifically recognises that the funds invested were indeed from NBC. The verdict states ’the money was from Universal Studios" (a 100% subsidiary of NBC). So any claims that charges of money-laundering have been accepted by the tribunal are false and agenda-driven."

With the ITAT’s 14 July order upholding the tax demand, penalty proceedings are likely to commence shortly. In a stock exchange filing, NDTV said it was surprised at ITAT dismissing the appeal it had filed against the tax demand.

“It is important to note foremost that the ITAT has accepted that there was no round-tripping or money laundering, as was alleged by Income Tax Department,” it said. The tax department had alleged that the media group had sought to evade income tax amounting to Rs 218.30 crore chargeable on investment of Rs 642.54 crore. The I-T department, subsequently, had sought a penalty of Rs 436.8 crore (at the rate of 200 percent of tax evaded.)

The I-T department had confirmed that Section 69A of Income tax Act (dealing with ‘unexplained money’ addition> was invoked against the media company. It upheld that “transaction used principally as a devise for the distribution/ diversion of sum” to NDTV and that “the beneficial owner of the money is the assessee”.

NDTV , however, said: “Surprisingly, the ITAT has dismissed the appeal filed by the company as not being maintainable but at the same time adjudicated the appeal filed by the Income Tax Department (ITD) against the same assessment order… It is inconceivable how appeal filed by the ITD against the assessment order is maintainable before the ITAT but the company’s appeal emanating from the same order is not maintainable.”

“Surprisingly, the ITAT has upheld the addition under Section 69A of the Act, purely on conjectures and surmises, ignoring the evidence adduced by the company including the annual reports of the investors,” it said. NDTV said, “The legal advice received is that a consistent view has to be taken and it appears that the order had been passed in a haste and the above inconsistencies have arisen because of a hurried order.”

“We have been advised that Section 69A of the Act is applicable only when money is found in possession of a taxpayer but not accounted for in the books of accounts. However, the said section has no application in the present case since admittedly, investment made by NBC Universal (admittedly t hen subsidiary of the GE Group) through its step down subsidiary, Universal Studios International BV, was duly recorded in the books of accounts of the company’s subsidiary, viz, NDTV Networks International Holdings BV,” it said. Stating that it will continue to fight the “misguided case” made by I-T Department, NDTV said it is “exploring all options available to it in accordance with law.”

With inputs from PTI