SC Stays HC Verdict Declaring Income Tax Act’s Section 147A Unconstitutional

The Supreme Court on Friday stayed the Punjab and Haryana High Court judgment declaring Section 147A of the Income Tax Act, 1961, unconstitutional.

The apex court also directed that assessment proceedings covered by the dispute should not proceed until the final disposal of the case.

A Supreme Court bench passed the interim order while hearing a Special Leave Petition filed by the Union government and Income Tax authorities challenging the High Court’s September 10 judgment.

The matter has been listed for final hearing on December 3, 2026.

The dispute centres on Section 147A, which Parliament introduced retrospectively from April 1, 2021. The provision clarified the meaning of ‘Assessing Officer’ for reassessment proceedings under Sections 148 and 148A, allowing jurisdictional officers to exercise such powers outside the National Faceless Assessment Centre framework.

The Punjab and Haryana High Court had struck down the provision after hearing a batch of more than 500 petitions.

It held that the retrospective amendment did not resolve issues concerning the existing faceless assessment framework under Section 151A and the related scheme.

The High Court had also set aside reassessment notices issued by jurisdictional Assessing Officers, holding that they had not followed the prescribed automated allocation and faceless procedure.

The Union government subsequently challenged the ruling before the Supreme Court. The Centre sought an urgent hearing, stating that the High Court judgment had created uncertainty over the reassessment mechanism.

With the latest order, the High Court judgment remains stayed while the Supreme Court examines the Union government’s challenge. Assessment proceedings covered by the dispute will remain on hold until the apex court decides the matter.

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