Madras HC Upholds Jurisdiction Of Assessing Officers To Issue Reassessment Notices Under Income Tax Act

The Madras High Court has held that Jurisdictional Assessing Officers have the authority to issue reassessment notices under Sections 148A, 148 and 147 of the Income Tax Act, 1961, observing that the retrospective insertion of Section 147A has clarified their jurisdiction to initiate proceedings for income escaping assessment.

Justice C. Saravanan dismissed a batch of writ petitions challenging reassessment proceedings initiated by Jurisdictional Assessing Officers, holding that the petitioners had only questioned the officers' jurisdiction and had not challenged the constitutional validity of Section 147A, which could be examined only by a Division Bench. He held:

“Since the assessees have a right to challenge the vires of the insertion of Section 147A of the Income Tax Act, 1961, vide the Finance Act, 2026, dated 01.04.2026, with retrospective effect from 01.04.2021, the Hon'ble Supreme Court has given liberty to the assessee to challenge the amendments.”

The petitioners had challenged reassessment notices issued under Sections 148A, 148 and 147 of the Income Tax Act, contending that Jurisdictional Assessing Officers lacked the authority to initiate proceedings under Section 148A. They relied on the Bombay High Court's decision in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax, which had held that such notices issued by Jurisdictional Assessing Officers were invalid.

During the pendency of the petitions, Parliament inserted Section 147A into the Income Tax Act through the Finance Act, 2026, with retrospective effect from 1 April 2021. The provision was introduced to clarify the jurisdiction of Assessing Officers in matters relating to income escaping assessment.

The Supreme Court subsequently set aside High Court judgments that had ruled in favour of taxpayers on the issue and permitted assessees to challenge the constitutional validity of the newly inserted provision before the respective High Courts.

Justice Saravanan noted that the Madras High Court had already held in an earlier decision that Jurisdictional Assessing Officers were competent to issue reassessment notices. The Court observed that this position had been strengthened by the retrospective insertion of Section 147A.

It further held that a challenge to the constitutional validity of Section 147A could only be considered by a Division Bench. Since the present writ petitions were confined to the jurisdiction of the Assessing Officers and did not challenge the validity of the amendment, the petitions could not be entertained.

Accordingly, the High Court dismissed the writ petitions. However, it granted the petitioners protection from recovery proceedings for 30 days to enable them to approach the Division Bench for challenging Section 147A or seek appropriate interim relief in terms of the liberty granted by the Supreme Court.

For Petitioner: Mr. S.Gautham Venkata Narayanan, Advocate

For Respondent: Mr. Avinash Krishnan Ravi, Junior Standing Counsel