Supreme Court stays ruling on Income Tax Act Section 147A

The Supreme Court of India has stayed a Punjab and Haryana High Court judgment that had declared Section 147A of the Income Tax Act, 1961, unconstitutional. The stay was granted following a challenge by the Union Government.

The legal dispute centers on whether reassessment notices under Section 148 must be issued through the National Faceless Assessment Centre (NFAC) or can be issued by a taxpayer’s local Jurisdictional Assessing Officer (JAO). While the faceless assessment scheme requires automated and faceless allocation, several High Courts previously ruled that proceedings initiated by local officers violated this procedure.

To address this, Parliament introduced Section 147A with retrospective effect from April 1, 2021, clarifying that the term “Assessing Officer” includes officers other than the NFAC. The Punjab and Haryana High Court struck this down, arguing that the legislature could not retrospectively override judicial decisions without addressing the underlying legal basis. The Supreme Court has ordered that assessment and reassessment proceedings shall not proceed further until the final disposal of the matter, which is scheduled for hearing in December 2026.