The stay is not a clean win for the Revenue. The Supreme Court has suspended the High Court judgment that had struck down Section 147A, which keeps the provision alive for now; but it has coupled the stay with a condition that the assessment proceedings themselves shall not move forward until the appeal is finally decided. The effect is to hold everything in place, the provision on the statute book but its machinery paused, pending a final hearing set for December.
New Delhi: The Supreme Court has stayed the judgment of the Punjab and Haryana High Court that struck down Section 147A of the Income Tax Act, 1961 as unconstitutional, on a special leave petition filed by the Union Government, while directing that the assessment proceedings shall not proceed further until the final disposal of the matter [Union of India v. Tej Partap Singh and connected matters].
A Bench of Justice Alok Aradhe and Justice K. Vinod Chandran passed the order on September 18, 2026, staying the High Court’s judgment until the final disposal of the Union’s petition.
The order
The Court recorded its interim direction in these terms:
“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. Notify for final hearing on December 3, 2026.”
The matter had been mentioned two days earlier by Additional Solicitor General N. Venkataraman before the Chief Justice of India for urgent listing, following which it was listed and taken up.
The background to the dispute
The controversy has its roots in the faceless assessment regime and, specifically, in the division of functions between the Jurisdictional Assessing Officer and the Faceless Assessing Officer or National Faceless Assessment Centre. Under that regime, a question arose 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 performed through the prescribed faceless mechanism.
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 initiated by Jurisdictional Assessing Officers in violation of the faceless procedure were invalid, while other High Courts took a contrary view, leaving the position unsettled across the country.
Parliament then inserted Section 147A, retrospectively with effect from April 1, 2021, to clarify that the expression “Assessing Officer” in Sections 148 and 148A refers to an Assessing Officer other than the National Faceless Assessment Centre, seeking, in effect, to establish that jurisdictional officers could conduct these reassessment proceedings.
What the High Court had held
The Punjab and Haryana High Court struck down Section 147A, holding 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. The amendment, the High Court held, impermissibly sought to circumvent the findings of the constitutional courts.
It is that judgment which the Supreme Court has now stayed, pending the final hearing of the Union’s appeal.
Why it matters
The shape of the interim order is the most important thing about it. A stay of a judgment that struck down a statutory provision ordinarily revives the provision, and to that extent Section 147A is, for now, back in operation. But the Supreme Court has qualified the stay in a way that protects taxpayers in the interim: by directing that the assessment proceedings shall not proceed further, it has ensured that the Revenue cannot use the revived provision to press ahead with reassessments while the constitutional question is undecided. Neither side, in other words, gets the full benefit of its position pending the final hearing.
That balance reflects the difficulty of the underlying question, which is one of considerable importance to tax administration. The constitutional issue is whether Parliament, by a retrospective “clarificatory” amendment, can validate a procedure that constitutional courts had already held defective, or whether doing so impermissibly overrides judicial findings. The settled principle is that a validating law must genuinely remove the defect that led to the earlier decision, rather than merely declare the earlier decision wrong; the High Court took the view that Section 147A did the latter, and the Supreme Court will now decide whether that view is correct.
The stakes are practical as well as doctrinal. A large number of reassessment proceedings across the country turn on whether a Jurisdictional Assessing Officer could act outside the faceless mechanism, and the validity of Section 147A determines the fate of those proceedings. By freezing the assessments while keeping the provision nominally alive, the Court has avoided both a flood of reassessments under a provision that may yet be struck down and the collapse of the Revenue’s position under a judgment that may yet be reversed. The question will be settled at the final hearing on December 3, and nothing in the present order expresses a view on the merits.
Case Title: Union of India v. Tej Partap Singh and connected matters (special leave petition against the Punjab and Haryana High Court judgment on Section 147A of the Income Tax Act)
Bench: Justice Alok Aradhe and Justice K. Vinod Chandran, Supreme Court of India
Date of Order: September 18, 2026 | Next Listed: December 3, 2026
Appearing: Additional Solicitor General N. Venkataraman for the Union
Status: High Court judgment striking down Section 147A stayed, on condition that assessment proceedings do not proceed further; matter to be finally heard on December 3, 2026.