TaxTMI 
TaxTMI 
2026 (9) TMI 1332
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....48 of the Act. 3. Vide the impugned order; respondent No. 1 initiated assessment proceedings under Section 147 of the Act for the assessment year 2019-20. 4. The facts of the case are that the petitioner, a private limited company incorporated in the year 2008, was engaged in the business of providing healthcare services by operating a multi-speciality hospital. With a view to restructuring its business, the management of the petitioner decided to demerge the entire operating business of the said hospital ('healthcare service business') into another company, namely Artmed Healthcare Private Limited (for short 'Artmed Healthcare') incorporated in the year 2016. 5. A scheme of demerger came to be filed by the petitioner and Artmed Healthcare before the National Company Law Tribunal, Hyderabad Bench, Hyderabad (for short 'NCLT'). The said scheme was approved by the NCLT vide order dated 08.03.2019, whereby the healthcare business of the petitioner stood transferred to and vested with Artmed Healthcare with effect from the appointed date of 01.04.2017. Consequent upon the demerger, the healthcare business stood transferred to Artmed Healthcare, while the petitioner retained th....
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....595/-; and iv. Contract receipts of Rs. 43,65,774/-. 9. On the basis of which respondent No. 1 formed the view that income chargeable to tax had escaped assessment. In response to the said notice, the petitioner filed a letter dated 09.04.2024 objecting to the proposed action on the ground that the entire income from the healthcare services business had been accounted for in the financial statements of Artmed Healthcare and duly offered to tax, and that the receipts towards fees for professional and technical services, interest income, and contract receipts likewise formed part of the total income of Artmed Healthcare and had been duly offered to tax therein furnishing, in support, a detailed explanation as to how and under what heads the entire income had been offered to tax, together with copies of the relevant supporting documents. 10. Without appreciating the contentions so raised by the petitioner, respondent No. 1 proceeded to pass an order dated 16.04.2024 under Section 148A(d) of the Act, holding it to be a fit case for issuance of notice under Section 148 of the Act. In the said order, respondent No. 1 recorded that pursuant to the demerger, Artmed Healthcar....
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....16.04.2024 issued under Section 148 of the Act were bad, illegal, and liable to be set aside, and permitting the Department to proceed with the action so initiated would amount to an abuse of the process of law, causing irreparable loss and hardship to the petitioner. 13. The petitioner accordingly being aggrieved by the proceedings initiated under Section 147 of the Act and thereby constrained to institute the present writ petition, having no other efficacious alternative remedy available to secure relief, and it being affirmed that no other writ petition or proceeding on the same cause of action had been filed or initiated by the petitioner before this Hon'ble Court or any other Court or forum. 14. Learned Senior Counsel for the petitioner submitted that pursuant to the demerger, the entire healthcare business was demerged to Artmed Healthcare and therefore, any proceedings to assess the petitioner for the income belonging to Artmed Healthcare is without jurisdiction and that respondent No. 1 having acknowledged the fact that the petitioner had demerged its healthcare services business with Artmed Healthcare and that both the companies had filed their return of income, the ....
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....t and is more than Rs. 50,00,000/-, notice has been issued within the time limit of six years as prescribed in Section 149(1)(b) of the Act. 19. Learned Senior Standing Counsel for Income Tax Department further submitted that the information in respect of said transactions aggregating to Rs. 108,36,46,354/- and the sum of Rs. 1,25,85,296/-received from Star Health and Allied Insurance Company Ltd was triggered in insight portal only against the petitioner and not against M/s. Artmed Healthcare Pvt. Ltd. Moreover, the fact that the said transactions belong to the demerged health services business of petitioner came to the cognisance of respondent No. 1 only when the petitioner filed its response dated 10.10.2024. 20. Learned Senior Standing Counsel for Income Tax Department contended on the footing that the mere claim of the petitioner that the said income with respect flagged transactions in the insight portal was offered in the hands of M/s. Artmed Healthcare Pvt Ltd. does not authenticate the genuineness of the disclosure made by M/s. Artmed Healthcare Pvt. Ltd., as no such information was available in insight portal against M/s. Artmed Healthcare Pvt Ltd. 21. Learned Se....
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....on shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice: Explanation 1.-For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; or [(ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or (iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or (iv) any information made available to the Assessing Officer under the scheme notified under section 135A; or (v) any information which requires action in consequence of the ord....
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....e distinction between income that is undisclosed and income that is merely attributed for technical or transitional reasons to the wrong PAN number in a departmental database is fundamental and respondent No. 1, in our view, has failed to appreciate this distinction. 26. This becomes further apparent from a plain reading of the impugned order dated 16.04.2024 itself. Respondent No. 1, while dealing with the sum of Rs.108,36,46,354/-, has recorded in terms that the said amount though corresponding to the insight information flagged against the petitioner, was "duly offered in the hands of Artmed Healthcare" and proceeded to hold that the matter nonetheless required "further verification" on account of "specified transaction details" not being forthcoming from the record. Similarly, in respect of the sum of Rs. 1,25,85,296/- received from Star Health and Allied Insurance Company Ltd., an amount the petitioner had admittedly already offered to tax, respondent No. 1 once again fell back on the same formula, namely that the matter "needed verification". 27. We are constrained to observe that an order under Section 148A(d) recording, in the same breath, that an amount has already b....
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....erification against material that was already disclosed and not a revelation of concealment. The extended period of limitation under Section 149(1)(b) was therefore, not available to respondent No. 1 on the facts of this case and the notice dated 16.04.2024 having admittedly been issued beyond three years from the end of the assessment year 2019-20, the ordinary period prescribed under Section 149(1)(a) is barred by limitation. 29. The submission of the learned Senior Standing Counsel for Income Tax Department that the insight portal reflected the impugned transactions only against the petitioner and not against Artmed Healthcare and the fact of the transactions belonging to the demerged healthcare business came to the Department's knowledge only upon the petitioner's response does not in our view, improve the Revenue's case. If anything, it confirms that respondent No. 1, upon being furnished this explanation together with supporting material ought to have verified the same against the return and financial statements of Artmed Healthcare, an exercise well within the Department's own means. Artmed Healthcare being an assessee on its own rolls, rather than mechanically proceeding....