Punjab & Haryana High Court Strikes Down Section 147A Income Tax Act As Unconstitutional

The Punjab & Haryana High Court has struck down the newly inserted Section 147A of the Income Tax Act, 1961, holding the provision unconstitutional.

The provision was introduced retrospectively to clarify the role of the Jurisdictional Assessing Officer (JAO) in reassessment proceedings.

A bench of Justice Deepak Sibal and Justice Rupinderjit Chahal pronounced the decision today.

A detailed judgment is awaited.

Section 147A was inserted with retrospective effect from April 1, 2021. It provides that, for the purposes of reassessment provisions, the expression “Assessing Officer” would mean an Assessing Officer having jurisdiction over the assessee.

The amendment came against the backdrop of the JAO-FAO controversy, which arose after the introduction of the faceless assessment framework in 2021. The dispute centred on whether reassessment notices and orders could be validly issued by the Jurisdictional Assessing Officers or whether such proceedings were required to be undertaken through the National Faceless Assessment Centre.

The Punjab & Haryana High Court itself had earlier, in Income Tax Officer, Ward 2(1), Chandigarh & Ors. v. Tej Partap Singh, quashed proceedings initiated by JAOs on the ground that they had not been undertaken through the prescribed faceless mechanism. Similar views were taken by several other High Courts. At the same time, certain High Courts upheld the power of JAOs to initiate reassessment proceedings, resulting in conflicting judicial views.

The Revenue challenged the adverse High Court rulings before the Supreme Court.

While the batch of appeals was pending, Parliament introduced Section 147A with retrospective effect, seeking to clarify the statutory position and validate reassessment action undertaken by Jurisdictional Assessing Officers.

Following the legislative amendment, the Supreme Court remitted the pending JAO-FAO matters to the respective High Courts for fresh consideration in light of the newly inserted provision. The petitioners were also permitted to challenge the constitutional validity of the retrospective amendment before the concerned High Courts.

The Punjab & Haryana High Court has now struck down Section 147A as unconstitutional.

The detailed judgment is awaited.