Orissa High Court Issues Notice On Challenge To Section 147A Of Income Tax Act
The Orissa High Court has recently issued notice on a plea challenging the constitutional validity of Section 147A of the Income Tax Act, 1961, which was introduced by the Finance Act, 2026, with retrospective effect from April 1, 2021.
Section 147A was introduced to clarify that the Assessing Officer issuing notices under Sections 148 and 148A would mean an officer other than the National Faceless Assessment Centre or an assessment unit under Section 144B. The provision was made retrospective from April 1, 2021.
A Division Bench of Dr. Justice Sanjeeb K. Panigrahi and Justice Murahari Sri Raman also noted that the Supreme Court had already stayed further assessment and reassessment proceedings in the related matter and, therefore, no separate interim order was required at this stage.
The petitioner challenged a reassessment notice dated March 21, 2024, issued by the Income Tax Officer, Ward Bhadrak, under Section 148 of the Act, along with a subsequent order dated January 30, 2025, concerning Assessment Year 2017–18. The petition also sought to declare Section 147A unconstitutional.
The challenge concerns whether Jurisdictional Assessing Officers can issue reassessment notices when the faceless assessment framework under Section 151A and the scheme notified by the Central Government in 2022 prescribe a mechanism involving automated allocation.
The petitioner argued that the Jurisdictional Assessing Officer has issued the reassessment notices without following the prescribed faceless mechanism.
The petitioner contended that the retrospective introduction of Section 147A could not cure the legal defect and that the provision was unconstitutional.
Other High Courts have also considered the issue. Recently, on October 12, 2026, the Andhra Pradesh High Court, in Bala Sreenivas Rao Somisetty v. ITO, struck down Section 147A as unconstitutional. It held that the provision could not validate reassessment notices issued without following the applicable faceless assessment framework.
The Punjab and Haryana High Court had also declared Section 147A unconstitutional in Jyoti Sareen v. Union of India on September 10, 2026.
However, the Union Government challenged that ruling before the Supreme Court in Union of India v. Bharat Industrial Enterprises Pvt. Ltd. On September 18, 2026, the Supreme Court granted leave to appeal and stayed the operation of the Punjab and Haryana High Court's judgment.
It directed that the assessment and reassessment proceedings covered by the dispute should not proceed until the final disposal of the case.
The Orissa High Court also referred to the Supreme Court's order dated April 10, 2026, in Income Tax Officer v. Tej Pratap Singh. In that case, the Supreme Court had permitted assessees to amend their writ petitions to challenge the constitutional validity of Section 147A.
The bench noted that the Supreme Court had also stayed further assessment and reassessment proceedings pursuant to the notices under Section 148.
In view of that existing protection, the Orissa High Court observed that no further interim order was necessary.
It issued notice to the respondents and directed that the matter be listed on December 16, 2026, along with Aditya Park Properties Pvt. Ltd. v. CBDT, which also raises a related issue.
For Petitioner: Advocate Rajesh Kumar Tripathy
For Respondent: Central Government Counsel Satya Narayan Patnaik for the CBDT; Junior Standing Counsel Avinash Kedia for the other respondents.