Centre Moves Supreme Court Against P&H High Court Judgment Striking Down S.147A Income Tax Act

The Union Government has approached the Supreme Court challenging the Punjab and Haryana High Court's recent judgment which struck down Section 147A of the Income Tax Act as unconstitutional.

Additional Solicitor General N Venkataraman mentioned the Union's Special Leave Petition before the Chief Justice of India for urgent listing.  CJI Surya Kant agreed to list the matter urgently.

"One batch of tax matters, 99.9% of the assessee community is following the law, both prior and post...this has created a huge hiatus. We have filed an SLP against the Punjab and Haryana High Court Judgment. We want it to be listed on Friday, because it has created a huge vacuum in law," the ASG submitted.

The provision arose from the dispute over the jurisdiction of the Jurisdictional Assessing Officer (JAO) & the Faceless Assessing Officer / National Faceless Assessment Centre (NFAC).

Under the faceless assessment regime, the question arose whether a JAO could independently issue reassessment notices under Section 148 and pass orders under Section 148A, or whether these functions had to be performed through the prescribed faceless mechanism. Several High Courts, including the Punjab & Haryana High Court in Income Tax Officer, Ward 2(1), Chandigarh v. Tej Partap Singh, held that reassessment proceedings initiated by JAOs in violation of the faceless procedure were invalid. Other High Courts took a contrary view.

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. In practical terms, the amendment sought to establish that jurisdictional officers could conduct these reassessment proceedings.

The P&H High Court held 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. It held that the amendment impermissibly sought to circumvent the findings of constitutional courts.