What is Section 147A of the Income Tax Act? Supreme Court stay P&H HC judgement to strike it down

Earlier this month, a division bench of the P&H High Court declared Section 147A unconstitutional and set aside the reassessment notices.

The Supreme Court on Friday stayed a recent judgment by the Punjab and Haryana (P&H) High Court that had declared Section 147A of the Income Tax Act, 1961, as unconstitutional.

According to a Live Law report, a bench comprising Justices JB Pardiwala and K Vinod Chandran passed the interim order on a plea filed by the Union government.

“The impugned judgment and order passed by the High Court shall remain stayed on the condition that the assessment proceedings shall not proceed further till the final disposal of the main matter,” the order said,

The Supreme Court has listed the case for a final hearing on 3 December 2026.

What is Section 147A of the Income Tax Act?

Parliament introduced Section 147A through the Finance Act, 2026, applying it with retrospective effect from 1 April 2021.

The provision clarified that for the purposes of Sections 148 and 148A, the “Assessing Officer” means an officer other than the National Faceless Assessment Centre (NFAC) or its assessment units.

In essence, it asserted that local Jurisdictional Assessing Officers (JAOs) have the authority to issue reassessment notices.

The amendment was brought in with a non-obstante clause, stating it would operate notwithstanding any court judgment, Section 151A, or any scheme framed under it.

Conflict over faceless assessments

The dispute behind Section 147A stems from a clash of authority between local tax officers (Jurisdictional Assessing Officers, or JAOs) and the National Faceless Assessment Centre (NFAC).

When the government shifted to a faceless tax regime, a major legal question emerged: Could local officers still independently issue tax reassessment notices under Section 148 and pass orders under Section 148A, or did all of this have to be processed through the new automated, faceless system?

This confusion led to conflicting court rulings across the country.

Several High Courts—most notably the Punjab & Haryana High Court in Income Tax Officer, Ward 2(1), Chandigarh v. Tej Partap Singh—cancelled reassessment notices issued by local officers.

They ruled that any action taken outside the official faceless procedure was legally invalid. However, other High Courts took the opposite view, deciding that local officers still had the power to issue these notices.

Why did the P&H High Court strike it down?

According to the Live Law report, the P&H High Court held that the legislature cannot simply declare, retrospectively, that a particular legal position was always valid when constitutional courts had already found the relevant procedure legally defective.

It held that the amendment impermissibly sought to circumvent the findings of constitutional courts.

The bench noted that Parliament had not amended the primary provision of Section 151A or the 2022 scheme, which still mandated randomised and faceless allocation of cases. Therefore, merely introducing Section 147A retrospectively did not cure the legal conflict.

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