The Supreme Court of India has stayed the Punjab & Haryana High Court's judgment that declared Section 147A of the Income-tax Act, 1961 unconstitutional. The interim order was passed by a Bench comprising Justices J.B. Pardiwala and K. Vinod Chandran while hearing the Union Government's challenge to the High Court ruling.
The controversy concerns the validity of reassessment notices issued by Jurisdictional Assessing Officers (JAOs) rather than through the faceless assessment mechanism established under the Income-tax framework. The Punjab & Haryana High Court had held that Parliament could not retrospectively validate reassessment notices merely by inserting Section 147A without addressing the legal defects identified by courts.
Section 147A was introduced through the Finance Act, 2026 with retrospective effect from April 1, 2021. The provision sought to clarify that reassessment proceedings under Sections 148 and 148A could be undertaken by jurisdictional assessing officers and not exclusively through the National Faceless Assessment Centre (NFAC).
While granting interim relief to the Union Government, the Supreme Court ordered that the High Court judgment shall remain stayed. At the same time, the Court directed that assessment and reassessment proceedings covered by the dispute should not proceed until the final adjudication of the matter.
The Centre argued that the High Court ruling had created substantial uncertainty in tax administration and could impact a large number of reassessment cases across the country. According to submissions before the Court, the dispute affects reassessment notices issued to taxpayers under the amended framework and carries significant revenue implications.
The Supreme Court has listed the matter for final hearing on December 3, 2026. The final decision is expected to determine the constitutional validity of Section 147A and clarify the powers of jurisdictional assessing officers in reopening tax assessments.