Nearly 63,000 restaurants and food businesses across India are staring down compliance notices triggered by the Income Tax Department's nationwide survey of PetPooja billing software. The investigation began in November 2025, using AI-enabled analytics to compare POS transaction data against declared turnover across roughly 1,77,000 restaurants. Officials found a pattern of bulk deletion of cash transactions at month-end through backend logins, with parallel records of actual sales maintained separately.
The legal fight over these notices runs much deeper than PetPooja.In the latest hearing before the Supreme Court on April 10, 2026, the bench was dealing with around 2,000 cases involving the single question of whether a Jurisdictional Assessing Officer had the authority to issue reassessment notices after the Faceless Assessment Scheme came into force.
The Bombay High Court, in Hexaware Technologies Limited vs Assistant Commissioner of Income Tax (2024), had ruled firmly that only the Faceless Assessing Officer could issue such notices under the CBDT's March 2022 notification. Several other High Courts agreed. The Delhi and Gujarat High Courts took the opposite view, holding that the JAO and FAO hold concurrent jurisdiction. The result is a split across six to seven High Courts, roughly three in favour of assessees and four in favour of Revenue.
In the April 10 hearing, the Supreme Court announced it would not finally decide the jurisdictional question itself. Instead, it will set aside the impugned High Court judgments and remand all matters back to the respective High Courts, with a direction to decide by July 31, 2026. The Court took note of what it called a "subsequent event," namely the retrospective amendment introducing Section 147A into the Income Tax Act, which the government describes as a clarificatory provision validating JAO-issued notices from April 1, 2021 onwards. Assessees have been given four weeks to amend their petitions before the High Courts and lay a constitutional challenge to Section 147A if they choose to do so. All contentions, including those not raised in earlier rounds, remain expressly open.
Critically, the bench confirmed that interim stays already granted in favour of assessees will continue during the pendency of proceedings before the High Courts. This matters enormously in the context of PetPooja and the broader reassessment wave. Revenue counsel told the Court that of the roughly 90,000 notices originally issued, around 30,000 to 37,000 remain live, with an approximate 16.5 lakh crore in income yet to be assessed across five years.
The battle is far from over. The jurisdictional question now returns to multiple High Courts on an accelerated timeline, carrying with it a fresh constitutional challenge to Section 147A. Until a final ruling emerges, every assessee holding a stay retains that protection, and every notice that was quashed by a High Court goes back for a fresh hearing.