ZENTEST SOFTWARE PRIVATE LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 12 AND ANR

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WP/9957/2022HC BombayHCBM01034261202224 August 20265 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the impugned Notice issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2015-16, is clearly time-barred. This decision is based on the admitted fact that the Notice was issued on or after April 1, 2021, and pertains to AY 2015-16. The Court relied on the concession made by the learned Additional Solicitor General before the Supreme Court in the case of Union of India & Ors. v. Rajeev Bansal. As per the Supreme Court's directions, if the matter pertains to AY 2015-16, no further adjudicatory exercise is required, except to declare the Notice as time-barred. Consequently, the Writ Petition was allowed, the impugned Notice was set aside, and any consequential actions were quashed. The rule was made absolute, and the Writ Petition was disposed of accordingly.

What were the facts?

The assessee, Zentest Software Pvt Ltd, filed a Writ Petition challenging a Notice issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2015-16. The primary challenge was based on the jurisdictional issue of who could issue the notice, with the assessee relying on a Bombay High Court judgment in Hexaware Technologies Limited. The High Court initially allowed the petition. The Revenue appealed to the Supreme Court, which remanded the matters back to the High Courts for fresh consideration, particularly in light of the insertion of Section 147A and the retrospective effect of an amendment. The Supreme Court noted a concession by the Revenue that for AY 2015-16, notices issued on or after April 1, 2021, would be time-barred, citing the case of Union of India & Ors. v. Rajeev Bansal.

What were the issues?

1. Whether the Notice issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2015-16 is barred by limitation. Assessee's Contention: The assessee argued that the impugned Notice, issued on or after April 1, 2021, for Assessment Year 2015-16, is time-barred, relying on the concession made by the Revenue before the Supreme Court in the case of Union of India & Ors. v. Rajeev Bansal. The assessee also initially challenged the jurisdiction of the issuing officer, referencing the Hexaware Technologies Limited judgment. Revenue's Contention: The Revenue, through the learned Additional Solicitor General, conceded before the Supreme Court that for Assessment Year 2015-16, notices issued on or after April 1, 2021, would be time-barred in light of the Supreme Court's view in Union of India & Ors. v. Rajeev Bansal. The Supreme Court's order directed the High Courts to first determine if the matter pertains to AY 2015-16, and if so, to declare the notices as time-barred without further adjudication.

Which sections of the Income-tax Act were involved?

Section 148,Section 147A

AI-generated summary — verify with the full judgment below

14.WP.9957.22.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 9957 OF 2022 Zentest Software Pvt Ltd, Pune .. Petitioner Versus Assistant Commissioner of Income Tax, Pune & Ors .. Respondents Mr. Niraj Sheth i/b Atul Jasani, Advocates for the Petitioner. Mr. Akhileshwar Sharma, Advocates for the Respondents/ Revenue.

CORAM: B. P. COLABAWALLA & FARHAN P. DUBASH, JJ. DATE: AUGUST 24, 2026 P. C. 1. The above Writ Petition interalia challenges the Notice issued under Section 148 of the Income Tax Act, 1961. The Assessment Year in question is Assessment Year 2015-16. 2. One of the main grounds on which the above Notice is challenged is that the jurisdictional Assessing Officer had no jurisdiction to issue the impugned Notice but it was only the Faceless Assessing Officer who could issue the same. In support of this contention, the Petitioner Assessee relied Page 1 of 5 AUGUST 24, 2026 Aswale ANJALI TUSHAR ASWALE Digitally signed by ANJALI TUSHAR ASWALE Date: 2026.08.25 12:34:06 +0530

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upon the judgement of this Court in the case of Hexaware Technologies Limited v. Assistant Commissioner of Income Tax, Circle-15(1)(2), Mumbai and Ors. (Writ Petition No.1778 of 2023 decided on 3rd May 2024). 3. Following the aforesaid decision in Hexaware Technologies Limited (Supra), the present Writ Petition came to be allowed and the impugned Notice issued under Section 148 was set aside. Being aggrieved by the decision passed by this Court in Hexaware Technologies Limited (Supra) as well as in a batch of several other Petitions which followed the decision in Hexaware, the Revenue preferred Appeals before the Hon’ble Supreme Court. The Hon’ble Supreme Court, by separate Orders dated 10th April 2026, 4th May 2026, 10th May, 2026, 15th May 2026, 15th May 2026 and 17th July 2026 respectively, passed in a batch of matters, remanded the matters back to the respective High Courts for consideration of the issues afresh, especially keeping in mind the amendment introduced by the Legislature, namely the insertion of Section 147A w.e.f. 1st April 2026 having a retrospective effect. The Hon’ble Supreme Court also clarified that all contentions raised before the Supreme Court as well as any other grounds to quash the impugned notices could be urged before the High Courts and the Supreme Court had not expressed any opinion on the merits of the Page 2 of 5 AUGUST 24, 2026 Aswale

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controversy. This is how the present Writ Petition has come up once again before us. 4. We note that in the aforesaid batch of Appeals disposed of by the Supreme Court, vide its Order dated 4th May 2026, the Supreme Court, inter alia, recorded a concession on the part of the learned Additional Solicitor General that in Assessment cases pertaining to A.Y.2015-16, the Notice issued on or after 1st April 2021, or proposed to be issued, for re-assessment, would stand barred by time in light of the view taken by the Supreme Court in Union of India and Ors. v. Rajeev Bansal, (2024 SCC OnLine SC 2693). For the sake of convenience, the Order passed by the Hon’ble Supreme Court on 4th May 2026 reads as under:

“ORDER 1. Delay condoned. 2. Leave granted. 3. This batch of civil appeals comprising 103 cases is slightly different than those cases which came to be disposed of by a three Judge Bench of this Court, including both of us (Surya Kant, CJI. and Joymalya Bagchi, J.), vide order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026 and connected matters. 4. The instant cases were segregated through the above- mentioned order on the premise that they may be pertaining to Assessment Year 2015-16. It is fairly conceded by Mr. N. Venkataraman, learned Additional Solicitor General of India, representing the Revenue, that in the assessment cases pertaining to the year 2015-16, the notices issued/proposed to be issued for Page 3 of 5 AUGUST 24, 2026 Aswale

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reassessment would stand barred by time in light of the view taken by this Court in Union of India & Ors. v. Rajeev Bansal, 2024 SCC OnLine SC 2693. 5. There is no quarrel that if the instant cases are found to pertain to Assessment Year 2015-16, then the impugned notices are liable to be struck down outrightly in terms of the concession on behalf of the Department recorded in paragraph 19 (f) of Rajeev Bansal (supra) and reiterated before us by the learned Additional Solicitor General of India. 6. However, if it is found that these cases pertain to an assessment year other than 2015-16, the respondent-assessees shall be entitled to raise all the contentions that have been permitted by this Court vide order dated 10.04.2026. Ordered accordingly. 7. Consequently, keeping in mind the reasons set out in order dated 10.04.2026, the impugned judgment in each appeal is set aside and the instant appeals are disposed of by remitting the matters to the jurisdictional High Courts for redetermination of the issues. As observed above, the High Courts shall firstly determine whether the matters pertain to Assessment Year 2015- 16. If it is found to be so, no further adjudicatory exercise shall be required to be undertaken by the High Court, except to declare the notices as being time-barred in light of Rajeev Bansal (supra). However, if it is found that the case does not pertain to Assessment Year 2015-16, then all the issues shall be resolved in terms of the order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026. 8. Pending application(s), if any, including application(s) for substitution and impleadment/intervention stand closed.” 5. As can be seen from this Order, the Supreme Court has clearly opined that if it is found that the matter pertains to A.Y.2015-16, no further adjudicatory exercise is required to be undertaken by the High Court, except to declare the Notice as being time barred in light of Rajeev Bansal (Supra). In the facts of the present case, it is an admitted fact that the Page 4 of 5 AUGUST 24, 2026 Aswale

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impugned Notice under Section 148 is issued on or after 1st April 2021 and pertains to A.Y.2015-16. In these circumstances, the impugned Notice issued under Section 148 is clearly time barred as per the concession made by the learned Additional Solicitor General before the Hon’ble Supreme Court in the case of Rajeev Bansal (Supra). Accordingly, the Writ Petition succeeds and the impugned Notice issued under Section 148 is set aside. Consequently, any action taken or emanating from the said Notice is also hereby quashed and set aside. 6. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs. 7. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. [FARHAN P. DUBASH, J.] [B. P. COLABAWALLA, J.] Page 5 of 5 AUGUST 24, 2026 Aswale

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