Cyberabad Citizens Health Services Private Limited v. Deputy Commissioner of Income Tax and another

1. FACTS OF THE CASE

Cyberabad Citizens demerged its healthcare business into Artmed Healthcare under an NCLT order dated 8 March 2019 effective 1 April 2017, retaining infrastructure and rental income. Healthcare receipts were disclosed by Artmed, while transitional TDS entries remained against Cyberabad’s PAN. After a documented reply, the officer issued a 16 April 2024 section 148A(d) order and section 148 notice, stating that transactions required further verification.

Source: PDF paras 2–10, pp.2–7

2. DISCUSSION BY THE COURT

The Court distinguished undisclosed income from income attributed to the wrong PAN during a demerger. The officer acknowledged disclosure but did not engage with the supporting material. Further verification could not substitute for the required satisfaction. Independently, the Court held that the evidence did not reveal escaped income meeting section 149(1)(b)’s threshold, so the extended period was unavailable.

Source: PDF paras 24–29, pp.15–20

3. JUDICIAL DECISION

The 16 April 2024 section 148A(d) order and consequential section 148 notice for AY 2019-20 were set aside on both absence of valid information suggesting escapement and limitation. The question was answered for the petitioner.

Source: PDF para 30, pp.20–21

4. OUTCOME

The writ was allowed, pending miscellaneous petitions closed and no costs awarded. The relief concerns these reassessment proceedings on this demerger record; it is not a general immunity for every PAN mismatch or corporate restructuring.

Source: PDF paras 30–32, pp.20–21

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Reconcile the legal transfer with the tax trail

The scheme, appointed date and both companies’ returns explained the transitional TDS entries. Merely asserting that another company paid tax would not reproduce that evidence.

Source: PDF paras5–9 and25, pp.3–6,15–16

Identify the defect in the officer’s reasoning

Acknowledging disclosure while invoking further verification did not establish escapement. The Court required examination of the explanation and Artmed’s records.

Source: PDF paras26–29, pp.16–20

Keep the limitation finding tied to the notice

For this 16 April 2024 notice, the Court found no qualifying revelation of escaped income of at leastRs.50 lakh. Its limitation holding does not state current reassessment deadlines.

Source: PDF para28, pp.18–19

Read discrepancies without inventing chronology

The source gives differing reply dates:9 April 2024 in facts/reasoning, 10 April 2024 in counsel’s submission and 10 October 2024 in Revenue’s submission. No reconciliation of those dates is inferred.

Source: PDF paras9,15,19,27, pp.5,9,11,17