Section 147A Income Tax Act Struck Down: P&H High Court

Section 147A Income Tax Act Unconstitutional: Punjab & Haryana High Court Quashes Reassessment Notices by Jurisdictional AOs

Published: 13 September 2026 · NyayVidhan

A Division Bench of the Punjab and Haryana High Court declared Section 147A of the Income-tax Act, 1961 unconstitutional and struck it down (paras 63, 79). The retrospective provision, inserted by the Finance Bill, 2026 with effect from 01.04.2021, sought to validate reassessment notices issued by jurisdictional Assessing Officers without curing the defect found by the courts (paras 4, 59-60). The Bench also quashed the notices for not being issued through randomised, faceless allocation (paras 78-79).

Key holdings

Section 147A of the Income-tax Act, 1961 was declared unconstitutional and struck down (paras 63, 79).

A validating law cannot override judgments without curing the defect they found (paras 54, 60).

Section 147A left Section 151A, the 2022 scheme and the random-allocation findings untouched (paras 58-60).

Section 148 notices must be issued through randomised automated allocation in a faceless manner (paras 67-68).

Notices issued by jurisdictional Assessing Officers were set aside (paras 78-79).

Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.

Brief Facts

Several High Courts had held that, under Section 151A and the scheme of 29.03.2022, a reassessment notice under Section 148 could be issued only by a faceless Assessing Officer chosen by automated allocation; others held the opposite (paras 24-40). While the Revenue's appeals were pending, Section 147A was inserted declaring that the Assessing Officer for Sections 148 and 148A means one other than the faceless units (paras 4, 43). On 10.04.2026 the Supreme Court remitted the matters for the High Courts to decide its validity (para 5). The petitioners, who had received Section 148 notices from their jurisdictional officers, challenged Section 147A and the notices (paras 1, 3, 6).

Court's Findings

Drawing on Supreme Court rulings on validating laws, including NHPC Ltd. and State of T.N. v. State of Kerala, the Bench held that the legislature may retrospectively remove the basis of a judgment by curing the defect, but cannot simply declare what the law always meant or set a judgment at naught (paras 45-54). Section 147A did not do this. Its non-obstante clause omits Section 130 and the scheme of 28.03.2022, and it is silent on the courts' finding that Assessing Officers must be allocated randomly by automated allocation (paras 58-59). Section 151A and the 2022 scheme remain unamended, so the provision conflicts with them and trenches on judicial power to circumvent unfavourable decisions (para 60). The Central Government could not exclude Section 148 from the scheme after 31.03.2022, and what Section 151A prohibited could not be done through Section 147A (para 61). Nor did it achieve its aims of certainty and less litigation (para 62). On the alternative ground, clause 3(b) of the scheme requires Section 148 notices to be issued through randomised automated allocation in a faceless manner; the Bench agreed with Hexaware and other rulings and differed from T.K.S. Builders, Snehdham Trust and Triton Overseas (paras 67-77).

Legal Principle

A retrospective validating law must remove the basis of the judgments it targets by curing the defect they identified; a mere declaration that overrides them while the underlying provision stands unamended trenches on judicial power. Under Section 151A and the 2022 scheme, Section 148 notices must be issued through randomised, faceless allocation (paras 54, 60, 67).

Precedents Relied Upon

NHPC Ltd. v. State of Himachal Pradesh Secretary & Ors. (2023) 17 SCC 1
Followed Discussed at ¶ 53
Principles for validating legislation: a law may validate an invalidated legislation only if it removes the cause of invalidity.
State of Tamil Nadu v. State of Kerala (2014) 12 SCC 696
Followed Discussed at ¶ 52
The legislature cannot set at naught a judgment of a constitutional court; separation of powers.
Janapada Sabha Chhindwara v. Central Provinces Syndicate Ltd. (1970) 1 SCC 509
Followed Discussed at ¶ 46
The legislature may amend a statute retrospectively but cannot overrule or set aside a judicial decision.

View all precedents (17)

Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality AIR 1970 SC 192
Followed Discussed at ¶ 47
To validate a tax held illegally collected, the cause of invalidity must be removed.
Indian Aluminium Co. v. State of Kerala (1996) 7 SCC 637
Followed Discussed at ¶ 48
Principles governing validation laws and the separation of legislative and judicial functions.
State of Tamil Nadu v. Arooran Sugars Ltd. (1997) 1 SCC 326
Followed Discussed at ¶ 49
Demarcation between legislative and judicial functions; retrospective amendment must remove the basis of the decision.
S.R. Bhagwat v. State of Mysore (1995) 6 SCC 16
Followed Discussed at ¶ 50
A State cannot escape the binding effect of a judgment against it by resorting to legislative power.
Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan (1996) 2 SCC 449
Followed Discussed at ¶ 51
A validating Act that did not cure the defect found by the court was struck down.
Kankanala Ravindra Reddy v. Income-tax Officer 2023 SCC OnLine TS 4476
Followed Discussed at ¶ 27, 56
After the 2022 schemes, reassessment proceedings under Sections 147, 148 and 148A must be conducted in a faceless manner.
Hexaware Technologies Ltd. v. Assistant Commissioner of Income Tax 2024 SCC OnLine Bom 1249
Followed Discussed at ¶ 29, 57, 75
Under the 29.03.2022 scheme, a Section 148 notice can be issued only by a faceless AO, not the jurisdictional AO.
Jatinder Singh Bhangu v. Union of India (2024) 466 ITR 474
Followed Discussed at ¶ 31, 76
Notices under Section 148 by the jurisdictional AO after Section 151A and the scheme were invalid.
T.K.S. Builders (P) Ltd. v. Income Tax Officer 2024 SCC OnLine Del 7508
Referred To Discussed at ¶ 34, 77
Held that a Section 148 notice could be issued by the jurisdictional AO; the Bench respectfully differed.
Snehdham Trust v. Assistant Commissioner of Income Tax 2025 SCC OnLine Guj 5771
Referred To Discussed at ¶ 38, 77
Decided the issue in the Revenue's favour; the Bench respectfully differed.
Triton Overseas Private Limited v. Union of India 2023 SCC OnLine Cal 6585
Referred To Discussed at ¶ 25, 77
Single Bench decided the issue in the Revenue's favour; the Bench respectfully differed.
Cherukuri Mani v. Chief Secretary, Govt. of Andhra Pradesh (2015) 13 SCC 722
Relied Upon Discussed at ¶ 70
Where the law prescribes a thing to be done in a particular manner, it must be done in that manner.
Hardeep Singh v. State of Punjab (2014) 3 SCC 92
Relied Upon Discussed at ¶ 73
No word in a statute is surplusage; a provision should not be reduced to a dead letter.
Commissioner of Central Excise, Bolpur v. Ratan Melting & Wire Industries (2008) 13 SCC 1
Relied Upon Discussed at ¶ 74
A circular contrary to statutory provisions has no existence in law.