The Supreme Court stayed the Punjab and Haryana High Court judgment which had struck down Section 147A of the Income Tax Act, 1961 as unconstitutional. The court directed that the reassessment proceedings connected with the dispute should not proceed until the case is finally decided.
The dispute concerns reassessment notices issued by Jurisdictional Assessing Officers (JAOs). Under the faceless reassessment system, several High Courts had earlier held that such notices could not be issued directly by JAOs and had to be issued through the prescribed faceless mechanism. Other High Courts had taken a different view.
Parliament later inserted Section 147A retrospectively from April 1, 2021. The provision stated that the Assessing Officer would mean an officer other than the National Faceless Assessment Centre or an assessment unit for Sections 148 and 148A. The amendment was intended to support the authority of jurisdictional officers in reassessment proceedings.
The matter then came before the Punjab and Haryana High Court in a batch of cases. The assessees’ counsel argued that Section 147A did not cure the basic defect because Section 151A and the faceless reassessment scheme dated March 29, 2022 remained unchanged.
The revenue counsel argued that Parliament had validly clarified who could act as the Assessing Officer and that the amendment could operate retrospectively.
A Division Bench comprising Justice Deepak Sibal and Justice Rupinderjit Chahal observed “Section 147A is noticeably silent with regard to the categoric findings returned by the constitutional courts that as per the scheme dated 29.03.2022, framed under Section 151A, allocation of AOs is required to be done randomly and through automated allocation.”
It further observed “Through and even after the retrospective enactment of Section 147A, Section 151A of the Act and the scheme framed thereunder continue to exist on the statute book and without any amendment.”
The court held “In the light of the above discussion, after holding Section 147A of the Act to be unconstitutional and directing it to be struck down, we further order setting aside of the notices issued to the petitioner(s) under Section 148 of the Act because such notices have not been issued through the process of randomized allocation of assessing officers and in a faceless manner as is mandated under Section 151A of the Act read with the scheme framed thereunder dated 29.03.2022.”
The Union Government challenged the ruling before the Supreme Court. A Bench comprising Justice Alok Aradhe and Justice K. Vinod Chandran stayed the High Court judgment and also made it clear that the reassessment proceedings would remain on hold until the main matter is finally decided.
The matter has been listed for final hearing on December 3, 2026.
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