BREAKING| Punjab & Haryana High Court Strikes Down Section 147A Income Tax Act As Unconstitutional

The Punjab & Haryana High Court struck down the newly inserted Section 147A of the Income Tax Act, 1961, which retrospectively clarifies the role of the Jurisdictional Assessing Officer (JAO) in reassessment proceedings.

The bench of Justice Deepak Sibal and Justice Rupinderjit Chahal pronounced the decision today. A detailed order is awaited.

Section 147A was introduced with retrospective effect from April 1, 2021. It provides that, for the purposes of Sections 148 and 148A, the expression "Assessing Officer" shall mean an Assessing Officer other than the National Faceless Assessment Centre.

The provision arose out of the long-running "JAO-FAO controversy" - a dispute over whether reassessment notices under the post-2021 faceless assessment regime could validly be issued by Jurisdictional Assessing Officers (JAOs) rather than through the National Faceless Assessment Centre.

Several High Courts, including the Punjab and Haryana High Court in Income Tax Officer, Ward 2(1), Chandigarh & Ors. v. Tej Partap Singh, had quashed orders passed under Section 148A(d) and consequential notices under Section 148 on the ground that they were issued by JAOs rather than through the prescribed faceless mechanism, while some other High Courts had taken the contrary view upholding JAO authority.

The Revenue's appeals against the adverse High Court rulings were pending before the Supreme Court when Parliament inserted the retrospective Section 147A, effectively seeking to legislatively validate all JAO-issued notices and override the High Court rulings that had struck them down.

Following this amendment, the Supreme Court had earlier remitted the batch of JAO-FAO matters back to the respective High Courts for fresh adjudication in light of the retrospective insertion of Section 147A, directing petitioners to raise the validity of this legislative change before their respective High Courts.