M/s. Bright Town Investment Advisor Private Limited, vs. The Income Tax Officer,

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WP/27445/2023HC TelanganaHBHC01049918202306 April 2026Author: P.SAM KOSHY,NARSING RAO NANDIKONDA8 pages
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What did the High Court hold?

The High Court allowed the writ petition. It held that the initiation of proceedings under Section 148A(d) and the subsequent notice under Section 148 of the Income Tax Act, 1961, against a dissolved company, M/s. WSS Agro Farms Private Limited, were bad in law. The Court reasoned that upon the approved scheme of amalgamation, the amalgamating entity ceases to exist. Therefore, proceedings could only be initiated against the transferee company, which is the petitioner. The Court relied on the judgments of the Supreme Court in PCIT vs. Maruti Suzuki (India) Limited and High Court judgments in M/s. Virchop Drugs Limited, Nunhems India Private Limited, and S.S.A. INDIA (P) LTD. The impugned notice and consequential proceedings were set aside. However, the right of the Department was reserved to initiate appropriate proceedings against the successor company (the petitioner) if they so choose.

What were the facts?

The petitioner, M/s. Bright Town Investment Advisor Private Limited, is the transferee and successor company to M/s. WSS Agro Farms Private Limited. An amalgamation scheme was approved by the National Company Law Tribunal on September 25, 2019, with effect from March 31, 2018. Under this scheme, all assets, properties, rights, and liabilities of M/s. WSS Agro Farms Private Limited were transferred to the petitioner. It was also agreed that all legal proceedings concerning the transferor company would be continued by or against the transferee company. The Income Tax Officer initiated proceedings under Section 148A(d) and issued a notice under Section 148 of the Income Tax Act, 1961, for assessment year 2019-20 against the dissolved entity, M/s. WSS Agro Farms Private Limited.

What were the issues?

1. Whether the proceedings initiated under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961, for assessment year 2019-20 against a dissolved company, M/s. WSS Agro Farms Private Limited, are illegal and liable to be set aside. (Question of law and mixed fact and law, turning on the provisions of Section 148A and Section 148 of the Income Tax Act, 1961). Assessee's contention: The proceedings could not have been initiated against the dissolved company; they should have been against the petitioner as the successor entity. The petitioner relied on the judgments in M/s. Virchop Drugs Limited vs. The Income Tax Officer and Nunhems India Private Limited vs. The Deputy Commissioner of Income Tax. Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE SIXTH DAY OF APRIL TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WP.No.27#5 OF 2023 134471 ...PETITIONER Between: AND M/s. Bright Town lnvestment Advisor private Limited,, (Transferee and Successor company to M/s. WSS Agro Farms private Limited), Having its Regd. Office at N612, Dalamal Towers, 211, Nariman point, Mumbai-40002.1 and corporate office at Plot No.',l3, Opp. UBI Bank, First Floor, NFCL project Office, Nagarjuna Hills, Panjagutta, Hyderabad-500Og2, Rep. by its DirectoiSri A.Vyasa Maheswara Rao. 1 2 The lncome Tax Officer,, Ward '17(1), Hyderabad, Signature Towers, Opp. Botanical gardens, Kondapur Road, Hyderabad-500084. The Pr. Commissioner of lncome Tax-2,, Signature Towers, Kondapur Road, Opp. Botanical Gardens, Hyderabad-500084. ...RESPONDENTS Petition under Nlicle 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased topleased to pass an order or direction, especially one in the nature of WRIT OF MANDAMUS holding that the order passed by 1St Respondent u/s.148A(d) of the Act, dt27.03.2023 with DINATBA/ASTtFt14BN2O22-23t1051377999(1) and the notice dated 27 03.2023 issued under section '148 of the Act with DlN. lrBA/AST/S/'148 112022-2311051383027(1) for the assessment year 2019-20 against M/s. WSS AGRO FARMS PRTVATE L|M|TED (PAN AACCV8677K) as being illegal, arbitrary and without application of mind apart from being violative of !F- judgements of Honble Hrgh Courts and Honble Supreme Court, and consequenfly set aside the same. l.A. NO: 1 OF 2023 Petition under Section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased be preased to stay all further proceedings pursuant to notice issued by the ls. Respondent, dated 27 03 2023, under section 149 of the Act for the assessment vear 2019-20with DrN. rTBA/AST/S/1 4B 1 t2022- 23t 1 051 383027 (1) l.A. NO:2 OF 2023 Between: 1 2 The lncome Tax Officer,, Ward 1.7(1) Hyderabad, Silynature Towers, Opp Botanicat gardens, Kondapur noro, iryaerlora_ioobio The Pr. Commissioner of lncome Tax_2,, Signature Tolvers, Kondapur Road, Opp. Botanicat Gardens, Hyderabad_S0dbAal --- - - ...PETITIONERS/RESPONDENTS AND M/s' Bright rown rnvestment Advisor private Limited,, (Transferee and successor company to M/s wss Agro Farms private t-imiieo), i-lavrn,r it. n"gd -offi"" ,t A/612, Daramar rowers, 21i, Nariman point, ^rrrn,,ori 400021 andcorporate office at Plot No 13' opp UBr Bank First rroor, 'ticl-Eroject off ce, Nagarjuna Hirs, Panjagutta Hyderabad-S0,0g2, Rep. ov itr oiru.tir'sri A Vyas:r Maheswara Rao. .RESPONDENT/PETITIONER Petition under Section j 51 cpc praying that in the circum:;tances stated in the affidavit fired in support of the petition, the High court may be preased preased to vacate the rnterim stay granted on 04.10.2023 in rA No. 1 0t 2023 in wp No. 27445 of 2023 Counsel for the petitioner : SRI A.V.RAGHU RAM Counsel for the Respondents: Ms.J.SUNITHA, SC for lT DEp.I . rep., MS.SUNDAR| R.ptSUpATt, Sr.SC for tT DEpT.

The Court made the following: ORDER

=-l ,r'i1llr:. :s .tHE HONOURABLE SRI JUSTTCE P.SAM KOSHY ANT) THE HONOURABLE SRI JT]STICE NARSING RAO NANDIKONDA W.P.No.27445 of 2023 Date:06.0.1.2026 Betu'een: M/s.Bright Town Inveshnent Advisor Irrivate Limited . . . Petitioner .\ n.i The Income Tax Offlcer, Ward- i 7( I ). IJyierabad and another. ...Respondents $DEE, 1'pt+ Hon blc Sri ..lu:;tlt:,.: !'.\u;n fiL:.'lt',) Heard Mr.A.V.Raghu Ram. learned counsel appears for the petitioner and Ms.J.Sunitha, leaLned Senior Standing Counsel for the Income 'fa.x Departmenl-, i'epresenting Ms.Sundari R.Pisupati, learned Seniot Standing Counsel fbr ti;e Income Tax Departmenl, appears fbr the responelenis.

2.

This writ petition has been fiiecl aggrieved by the initiation of proceedings under Section 1 18A (ii) oi- the Income Tax Act, I 961 (for short "the Act") against a dissolved or non-existing entity. The proceedings were initiateci againsr t\'fr's.VVSS Agro Farms Private Limited, rvhich stood merged with lhr: petitioner, in a scheme of amalgamatiLrn, instituted i.refot'e thr i'l'ational Conlpany Law' Tribunat, Bench- l, I{ycierabacl. l-i;3=lsllrt:n:e of amalgamation rvas

IE I allowed on 25.09.2019 and al i the assets. proped-ies, rights and liabilities of the dissolved Mls.1,/VSS Agro Farms Private I-'imited stood transfer-red to the ar,ralgamated establishrner-rt i'e' the petitioner entity viz., Il'Vs.Briglrt Town Invcstment A'dvisor Priva'te Lirnited, with effect from 3 1.0r.20 i8. It u'as aiso agreed upon that alt legal proceedings pe:-r'Jins or a[:rinst the trans eror colnpany shall be continued by or agair:::i the transferee compa 1)'. j. ln the said adrnitteC l)ctLral matrix. the initiation of proceedings under Section l48A (d) of the Act coul'l not had been initiated against the dissclved company i.e. N'lr's.VVliS Agro Farms Private Limited, it coutd had bc.en only agairrst the petitioner establishment, if at all, peirriissible ttnder law.

4.

Leamed counsel for lhe Lretitioner lelleri upofl the .ludgmetrts of this High Court in Nl/s.Virs-hop l)rugs l-irnited ,.' The Income Tax Officerrdecided on 21r.09.2013 atld also in Nunhems India Private Limited v. The Deputy Commissioner of Income Tax Circle 512 decided on 0,1.0i.1011, Both these rvriL petitions stood aliowed relying upon tlle C,:r:iston:; of tl''e Hon'ble .('u-prerne Court. 'wp.No.tt2az of 2023 t wp.lto.378E3 of 2021

3 For ready rel-erence, the relevant portion of paragraph Nos.9 and t0 of the judgment in the case of Nunhems India Private Limited (2 supra) is reproduced herein under:

"9. tt worrld be relevant at this juncture to take note ol the relevant portion ol the oider: passed by this Court in W. P.No. I 1247 of 2023. which is rcproduced herein under:

"

20.

The [Jon'ble Suprerne Coirrt fioall-i endorsing the earlier vie w of the Hrgh Court oi Dcllti tn tir.' r:asc of Spice lnfotainrnent. supr'4 in paragraph Nos.3i 1o 35 held as under: "[u the present case, despite the t'act that tlre AO was inlbrrned of the arnalgatnatirg c,)rnpan)' having ceased to exist as a result of iire apptorcrl scircnte of amalgalnatiou, the jurisdictional noticc was issued only in its narne. fhe basis on rvhich jurisdiction uas invoked was fundarnentally at odds with the legal principle that the amalgamating entity ceases to erist npon lhe applor,ed scheme of amalgamation. Participation in the proceedirrqs b1 the appellant in the circumstarrces ianllot opemlc as an estoppels against law. This position uow holds the llled irr l iew of the judgntent ol a co-ordinale Bench of trvo learned judges which disrrissed the appeal of the Rereoue in Spice Enfotainment on 2nd Nov.. 2017. 1'he decisioir in Spice Enfotainment has been follorved in the case of the respondent while disrnissirg the Specia! Leavc Petition for asst. yr- 201l-12. ln doiug so. this (lourt has rclied orr the decision in Spice Enfotirinmcut. We find no reason ti, takc- a Ciflerent view. There is a yalue which lhe Court tuList irbide by in promoting the iuterest of certaittty in t.rx litigalion. The view rvhich has beel taken b,l this Courl irt relation to the respondent for asst. yr.20li l2 rnLrst. iri otrr' \'iew be adopted in respect of the presert appeal rilrich relates to asst- yr. 2012-13. Not doing so rrjll onl)' result in unceltaint-v and displccement o.f scttled expectations. There is a significant value rr4riclt must attach to observing the requirernent of cortsistency and certainty. lndividual affairs are conducted and business decisions are made in the expectatior of consistency. uttitblrnity and certainry-. To detract fiom those prineiples is neither expedient nor desirable. For the reasons- rt c flrtd no merit in the appeal. l'irc appeal is accordingly dismissed. l'here shall be tto order as tc) costs ''

Il- 4 ll. It is also relevatrL ;Ll tltl::.ltrtrcLirrc l,l lakr notc ol'i':t atrothcl rec,:nt dccision o1'the iliqh iloLrri ,r1' B.'nba\ irr 1l'e case ll'SL,S.A TNDIA (P) LTD. v!i. !)l,PL'l'r' coMl\{lssloNl R Otrr INCOME TAX. *helein thc tlq'11i-'21' llish L-ourt reiteiiLting the vieu of the High Cour-i, o1 l)eihi in '.lie case of -spioe lntiiL tinmeni, supra, and also followirg the iliullrr-n oithe Lltrtt'blr: SLtprer te Coritt in the case of l\{aruti Suzuki {lndiii) iirlit,;d. supra. ilr prraglaph Nos.7 and 8 has helti as uitiiai: ''The stand ol' tlrc i1ei,.:rtiit: ihitI tht] [eassc5irrJnI lvas justified in vier.r, of thc lact ihal 1nc PAN in thc r:i,ttre of the nott- existent entity had ,-snltire(l lclii r rl,.tc:s not cleate al'l cxc'rption in the falour o1'the Relerue t(: (iiiul. il anl rxalncr the prirrciples enunc iated hereinab,:r .-'. Be that as it nra! lhe rviit pi"irirrn is rliorrecl. -l-lr: ir,rpugned notice dt.J lst March- fi)l I '.'rc ,.rrd-il (ll ?)ssessttrot'rt dt.l; 'tl"larcir. 2022 as also the coirse'r.irrerrl!ll dcrrarrC r..otice and penal 1 nolice dr jl'r Varch. l0l- -rr., .r-r r,id. . '

22.

Given the aibresatl il,cil li:r-i ir rrr-,.t it'r striilc,s oi rhc case :urd also rhe admitted f::r.:lual lrltr ir. ls i;as i:een. r'er.'ea1:d in tile preceding paragrapils. 'r'c ilr-,. ol'thc ciinsideled viev ihat lhe present is also the ',:ase i,hici,. s,lri.rrc]'r sta[ds covered i-'y the dccjsiorr of the FIor! bi.' Suplente Cor.u'i in the case of N{aruti Suzr-rki (Inclic) Li;,r:iciL (:uprl)- anii thc re,lelt1 decisit,n of the High fqlrt rrt Bc,r'::irr,) iri -.hc i:ase oi SI-S,l Ii;DIA (P) LT D., (supra). and thc r:rl lie!- .ii:d.r.r',enL ol the Lligh Cor"rft of Delhi in the case ol Spicc ijrii-)t:rr hrnenl (.-{t)pri{).

23.

The presenL Writ Pctition iiLrsetves to be ait',i is ac:c',rdiirgl)' allowecl. holdirg thrt tlr: rlcii.. derecl l'i.01..10l-r issued Section l48A(d) oi rhc .,\,..1 r;itd liri' consequettiiai nr;trce of the sanre dale i.e. 2:l.03.ltlli L;nder Sr:ctitir 148 oi the {ct. both being bad in lau,, are sr-'t irsiclc. a:t the enl.ite proccediirlls itsellis agaittst a non-er istini: (',r'riiur'i.

10.

Keeping iu r''ien tlic a t,.,ii::rtirj iudicial precsiljnts and the decision rendered by thc iio;r'bi.'Sr:pleine Ccurt in the case of PCIT v. NIARUTI SUZII[(i il{DlA LIIIIITEDT. rie areolths considered opinion that the p!'clcnt is a fit oaser \t,hicl deserues to be allorved ancl is trccr.rciinrii allo*ed. Tht: irnpL 1:necl Notice dated 17.06.201 and Ihr: ii.)i't:iocltieni ial procecdit',es rlrarvn b1' the respondent authoritics -cta:rd-s set 15fdgr'quashed- [{ou'el er. the right of the Departmenl. :ria;ris riservoci to initiate appropriate proceedings. ifthcy s0 11 an1. ;iqailtst llie n-ergctl conlpan\. 'A R ONUNE 2019 SC 714

5

5.

In view of the judicial precedent which is consistently being followed by the Hon'ble Supreme Court as aiso by all the High Courls, we are inclined to allon' the instant writ petition as well' As a consequence, the impugned notice issued against the going company i.e. M/s.VVSS Agro Farias Private Limited is set aside reserving the right of the Depafimr:nt of availing appropriate legal remedies for the statute still permits against the successor company i.e. .the petitioner.

6.

It is needless to mention that the petitioner also, if at alf if the Income Tax officer initiates any' pioceedings would be entitled represent and contest the case otl rnelits. in accordance with law' 7 . Accordingiy, this Writ Petition stands allowed' No order as to costs. Miscellaneous applications pending, if any, shall stand closed. SD/.U. SUDHA ASSISTANT REGISTRAR //II 6 To, SECTION OFFICER The lncome Tax Officer,, Ward 17(1), Hyderabad, Signature Towers, Opp. Botanical gardens, Kondapur Road, Hyderabad-500084. The Pr. Commissioner of lncome Tax-2,, Signature Towers, Kondapur Road, Opp. Botanical Gardens, Hyderabad-500084. One CC to SRI A.V.RAGHU RAM Advocate [OPUC] One CC to SRI SUNDARI R PISUPATI, (Sr SC for lncome Tax Dept). [OPUC] Two CD Copies. BSK 2 J,

4.

"P 5. i HIGH COURT DATED: 0610412026 ORDER WP.Nos.27445 OF 2023 ALLOWING THE WRIT PETITION WITHOUT COSTS 1 HE 5IA 'rdr )() (J 2 B JUll 2026 9 I O6spnrcs Pzo5 t \\ t

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