Bombay High Court

ZENTEST SOFTWARE PRIVATE LIMITEDversusASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 12 AND ANR

Decided: 15 June 2026
Disposal: Disposed Off
Bench: B P COLABAWALLA FIRDOSH PHIROZE POONIWALLA

Holding

The sanction obtained under Section 151(i) for the relevant assessment years is invalid, and therefore the notices, assessment orders and consequential orders under Sections 156 and 271 are quashed.

Summary

Zentest Software Private Limited filed several writ petitions challenging income tax notices and assessment orders for AY 2016-17 and 2017-18, alleging that the sanction for assessment was improperly obtained. The Court relied on its earlier decision in Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax, which held that for AY 2016-17 the sanction should have been under Section 151(ii) of the Income Tax Act, not Section 151(i), rendering the sanction invalid. Applying that reasoning, the Court declared the sanction invalid for both assessment years, thereby invalidating the notices issued under Section 156 or 271 and the subsequent assessment orders. Consequently, all such notices, assessment orders and consequential demands were quashed. The petitions were disposed, and any pending interim applications were also dismissed.

Issues considered

Whether the sanction obtained under Section 151(i) of the Income Tax Act for AY 2016-17 and 2017-18 is valid.
Whether notices issued under Section 156 or 271 based on an invalid sanction are liable to be quashed.
Whether assessment orders passed on the basis of an invalid sanction should be set aside.

Legislation cited

Income Tax Act, 1961 — s. 151(i), 151(ii), 156, 271

Subjects

Income Tax
Section 151
Improper sanction
Assessment order
Writ petition
Quashing of notice
Assessment year 2016-17
Assessment year 2017-18

Judgment

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Digitally
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
signed by
PURTI
PURTI PRASAD
PRASAD PARAB
CIVIL APPELLATE JURISDICTION
PARAB Date:
2023.10.07
18:03:18
+0530
WRIT PETITION NO. 9954 OF 2022

Zentest Software Private Limited ….Petitioner
V/s.
Assistant Commissioner of Income
Tax, Circle 12 and Anr. …Respondents

ALONGWITH
WRIT PETITION NO. 11183 OF 2022
ALONGWITH
WRIT PETITION NO. 11566 OF 2022
ALONGWITH
WRIT PETITION NO. 11860 OF 2022
ALONGWITH
WRIT PETITION NO. 11916 OF 2022
ALONGWITH
WRIT PETITION NO. 12314 OF 2022

----
Mr. Niraj Sheth i/b Mr. Atul K. Jasani for Petitioner in WP No.9954/2022.

Ms. Ritika Agarwal a/w Mr. Sandesh Salunkhe i/b Ace Legal for Petitioners
in WP No. 11183/2022, WP No. 11566/2022, WP No. 11860/2022, WP No.
11916/2022 and WP No. 12314/2022.

Mr. Suresh Kumar for Respondents in WP No.9954/2022, WP No. 11183/
2022, WP No. 11566/2022, WP No. 11860/2022, WP No. 11916/2022.

Mr. Akhileshwar Sharma for Respondent in WP No. 12314/2022.
----

CORAM : K.R. SHRIRAM &
NEELA GOKHALE, JJ.
DATED : 4th OCTOBER 2023

P.C. :

1. These are Petitions which relate to Assessment Year 2016-

2017 or 2017-2018.

Purti Parab
2/3 945 to 950-WP-9954-2022 @ Ors.doc

2. Counsels state that in all these Petitions the issue of improper

sanction having been obtained has been raised among other grounds, in the

petition as well as during the hearing. Counsels state that the issue of

improper sanction has been decided by this Court in the case of Siemens

Financial Services Private Limited v. Deputy Commissioner of Income Tax

and Others1, wherein the Court has held that for Assessment Year 2016-

2017, the sanction should have been given under Section 151(ii) and not

under Section 151(i) of the Income Tax Act, 1961 (“the Act”) and

consequently the sanction is invalid. The Court has stated that in view of

the invalid sanction, the notice issued itself will be invalid and has to be

quashed. We would also add, if the notice has to be quashed, if

there is an assessment order passed subsequently, those

assessment orders having been passed relying on an incorrect

sanction, will also have to be quashed. Ordered accordingly.

3. In view of the above, all consequential notices/demands issued

under Section 156 or 271 of the Act will also have to be quashed. Ordered

accordingly.

4. All Petitions disposed.

5. Counsels further state that the findings in Siemens Financial

1 Writ Petition No. 4888 of 2022 Dated 25 th August 2023.
Purti Parab
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Services Private Limited (supra) will squarely apply to the Assessment Year

2017-2018 as well. Therefore, all such notices issued for Assessment Year

2017-2018, the assessment orders and the consequential orders are also

quashed and set aside.

6. We clarify that all other grounds could be raised by the parties

at appropriate stage in any other proceeding.

7. In view of disposal of Petitions, pending interim application, if

any, also stands disposed of accordingly

(NEELA GOKHALE, J.) (K.R. SHRIRAM, J.)

Purti Parab

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