Parliament had inserted Section 147A retrospectively to clarify that reassessment notices could be issued by a taxpayer’s Jurisdictional Assessing Officer rather than only through the faceless centre. The Punjab and Haryana High Court struck it down, holding that the legislature cannot retrospectively declare a defective procedure valid without curing the defect. The Centre now says the ruling has created a vacuum, and the Supreme Court has agreed to hear it urgently.
New Delhi: The Union Government has moved the Supreme Court challenging a recent judgment of the Punjab and Haryana High Court that struck down Section 147A of the Income Tax Act, 1961 as unconstitutional.
Additional Solicitor General N. Venkataraman mentioned the Union’s Special Leave Petition before Chief Justice of India Surya Kant for urgent listing, and the CJI agreed to take it up. The ASG submitted that the matter concerned a batch of tax cases, that the overwhelming majority of the assessee community had been following the law both before and after the change, and that the High Court’s judgment had created what he called a huge hiatus and a vacuum in law. He sought a listing on Friday.
The JAO-FAO controversy
The provision has its roots in a dispute that has run through the High Courts since the faceless assessment regime was introduced in 2021. The question was a jurisdictional one: whether a Jurisdictional Assessing Officer could independently issue reassessment notices under Section 148 and pass orders under Section 148A, or whether those functions had to be routed through the faceless mechanism operated by the National Faceless Assessment Centre.
Several High Courts, including the Punjab and Haryana High Court in Income Tax Officer, Ward 2(1), Chandigarh v. Tej Partap Singh, held that reassessment proceedings begun by Jurisdictional Assessing Officers in breach of the faceless procedure were invalid, and quashed the resulting orders and notices. Other High Courts took the opposite view and upheld the officers’ authority, producing a conflict that the Revenue carried to the Supreme Court.
The retrospective amendment
While the Revenue’s appeals were pending, Parliament inserted Section 147A through the Finance Act, 2026, with retrospective effect from April 1, 2021. The provision declared that, for the purposes of Sections 148 and 148A, the expression “Assessing Officer” means, and shall always be deemed to have meant, an Assessing Officer other than the National Faceless Assessment Centre or an assessment unit under Section 144B(3). In effect, it sought to establish that Jurisdictional Assessing Officers could validly conduct these reassessment proceedings, and to do so backdated to the start of the faceless regime.
The Supreme Court had earlier sent the batch of JAO-FAO cases back to the respective High Courts for fresh consideration in light of the amendment, expressly leaving open the questions of the validity, scope, effect and retrospectivity of Section 147A, and permitting assessees to challenge the provision. The Punjab and Haryana High Court’s judgment was the response to that invitation.
What the High Court held
A Division Bench of Justice Deepak Sibal and Justice Rupinderjit Chahal struck the provision down. Its reasoning rested on a settled principle governing what is known as validating legislation: a legislature may retrospectively cure a law only by removing the very basis on which a court found it defective, and cannot simply declare, after the event, that the earlier judicial interpretation no longer applies.
The Court held that Section 147A failed that test. The earlier decisions had turned on Section 151A of the Act and the faceless e-Assessment Scheme of March 2022, which mandate randomised, automated allocation and a faceless manner of issuing notices under Section 148. Section 147A, the Court found, left that foundation untouched: it merely redefined who qualifies as an Assessing Officer, without altering the requirement that reassessment be conducted through the faceless mechanism. Since the basis of the earlier rulings survived intact, the redefinition could not retrospectively validate notices that had been issued in breach of it.
Reported accounts of the judgment record the Court observing that a validating law enacted solely to defy a judicial pronouncement would be an instance of legislative overreach and therefore unconstitutional. The Court did not stop at striking down the provision; it also set aside the Section 148 notices issued to the petitioners before it, holding that they had not been issued through the randomised, faceless route that the scheme requires.
Why it matters
The case sits at the meeting point of two things courts watch closely: the limits of Parliament’s power to legislate around a judgment, and the integrity of the faceless assessment system built to reduce discretion and contact between taxpayer and officer.
On the first, the doctrine the High Court applied is well established. A legislature can validate a struck-down law, but only by curing the defect the court identified, not by overruling the court’s conclusion while leaving the defect in place. The distinction is subtle in the abstract and sharp in application: the question in every such case is whether the amendment changed the legal foundation or merely re-labelled it. The High Court found this a re-labelling. Whether the Supreme Court agrees is the heart of what it will now decide.
On the second, the stakes are large and practical, which is why the Centre pressed for urgency. If the High Court’s reasoning holds, a great many reassessment notices issued by Jurisdictional Assessing Officers from April 2021 onward, which Section 147A was designed to protect, become vulnerable to challenge on the same jurisdictional ground, at least within that Court’s territory. The ASG’s description of a vacuum reflects that exposure: the provision that was meant to settle the question has itself been removed, and the underlying conflict between High Courts remains unresolved.
It should be kept in view that this is one High Court’s judgment, that other High Courts had taken the contrary view on the original JAO question, and that the Supreme Court itself left the validity of Section 147A open when it remanded the batch. The petition now gives the Court the occasion to resolve both layers at once: whether Jurisdictional Assessing Officers could act outside the faceless mechanism, and whether Parliament’s retrospective attempt to say they always could is constitutionally valid. Nothing has yet been decided; the Centre has filed, and the Court has agreed to list.
Case: Union of India’s Special Leave Petition against the judgment of the Punjab and Haryana High Court striking down Section 147A of the Income Tax Act, 1961
High Court Bench: Justice Deepak Sibal and Justice Rupinderjit Chahal, Punjab and Haryana High Court
Mentioned before: Chief Justice of India Surya Kant, Supreme Court of India
Appearing for the Union: Additional Solicitor General N. Venkataraman
Status: SLP filed and mentioned for urgent listing; the CJI agreed to list it. No notice or interim order reported yet. The constitutional question remains to be decided.