Bombay High Court Directs Department Not To Reassess Taxpayers Challenging Income Tax Act Sec. 147A

The Bombay High Court on 2 September directed the Income Tax Department not to proceed with reassessment proceedings against taxpayers who have challenged and pressed the constitutional validity of Section 147A of the Income Tax Act, 1961, including in petitions not presently listed with the main batch of cases.

A Division Bench of Justices B.P. Colabawalla and Farhan P. Dubash passed the interim order in a batch of petitions led by Bharat Petroleum Corporation Limited. The judges extended the interim protection already granted in several petitions to other pending matters challenging Section 147A. They observed:

“Considering the above, we direct that in none of the matters in which the constitutional validity of Section 147A of the IT Act is challenged and pressed, even though not listed with the aforesaid batch, the Assessing Officers shall not proceed further with the reassessment proceedings.”

The Bench has been hearing the main batch on a day-to-day basis since 31 August 2026. It also considered petitions challenging notices issued under Section 148 that had initially been filed before different Benches and were subsequently transferred to the present Bench.

Some of these petitions had not been assigned fresh numbers after the transfer. As a result, the petitioners could not amend their pleadings to specifically challenge the constitutional validity of Section 147A.

The Court held that the petitioners should not be prejudiced by this procedural situation. It therefore directed the concerned Assessing Officers not to proceed with reassessment or recovery proceedings, as applicable, in those matters as well.

The directions are interim in nature and do not determine the constitutional validity of Section 147A, which remains under consideration before it.

For Bharat Petroleum Corporation Limited: Senior Advocate J.D. Mistri, along with Gunjan Kakad, instructed by Atul K. Jasani, appeared.

For the Revenue: Additional Solicitor General N. Venkatraman appeared along with Subir Kumar and other counsel representing the Income Tax Department.