What is Section 147A of the Income Tax Act? The Supreme Court stayed the P&H HC judgment and set it aside | Today’s news
The Supreme Court on Friday set aside the recent judgment of the Punjab and Haryana (P&H) High Court which had declared Section 147A of the Income Tax Act, 1961 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 resolution passed by the High Court shall remain suspended subject to the condition that the court proceedings shall not continue until the final resolution of the matter,” reads the resolution.
The Supreme Court scheduled the case for final hearing on December 3, 2026.
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What is Section 147A of the Income Tax Act?
Parliament introduced section 147A through the Finance Bill 2026 and will apply it retrospectively from 1 April 2021.
The provision clarified that for the purposes of Sections 148 and 148A, “assessing officer” means an officer other than the National Faceless Assessment Center (NFAC) or its assessment units.
In essence, he argued that the local Jurisdictional Assessing Officers (JAOs) have the power to issue reassessment notices.
The amendment was introduced with a non-essential clause stating that it would operate notwithstanding any court order, Section 151A or any scheme contained therein.
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Conflict due to anonymous rating
The controversy behind Section 147A stems from a clash of powers between Jurisdictional Assessing Officers (JAOs) and the National Faceless Assessment Center (NFAC).
When the government moved to an anonymous tax regime, a crucial legal question arose: Could local officials still independently issue section 148 assessment notices and make section 148A orders, or did it all have to be processed through the new automated anonymous system?
This confusion has led to conflicting court decisions across the country.
Several High Courts – notably the Punjab and Haryana High Court in Income Tax Officer, Division 2(1), Chandigarh v. Tej Partap Singh – have struck down reassessment notices issued by local officials.
They ruled that any action taken outside of the official anonymous procedure was legally void. However, other high courts have taken the opposite view and ruled that local officials still have the power to issue these notices.
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Why did the P&H Supreme Court strike it down?
According to the Live Law report, the P&H Supreme Court ruled that the legislature cannot simply retrospectively declare that a particular legal opinion was valid whenever the constitutional courts have already found the relevant procedure legally flawed.
He stated that the amendment impermissibly aimed at circumventing the findings of the constitutional courts.
The court noted that Parliament had not changed the primary provision of s 151A or Scheme 2022, which still mandated random and anonymous case allocation. The mere introduction of Section 147A retroactively therefore did not resolve the legal conflict.
