S.147A Income Tax Act Challenge: Delhi High Court Orders Status Quo On Recovery, Penalty Proceedings

The Delhi High Court has directed that the status quo be maintained on recovery and penalty proceedings against two assessees who have challenged the constitutional validity of the newly inserted Section 147A of the Income Tax Act, 1961, which retrospectively clarifies the role of the Jurisdictional Assessing Officer (JAO) in reassessment proceedings.

The division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta passed the direction while allowing applications filed by Neena Wadhwa and Surender Kumar Wadhwa to amend their pending writ petitions in terms of directions issued by the Supreme Court.

The Court directed the Income Tax Department to file its replies within two weeks and ordered that the status quo in relation to recovery and penalty proceedings be maintained till then.

The matters have been listed for August 24.

The assessees had originally approached the High Court challenging reassessment notices issued under the Income Tax Act. Their petitions were subsequently dismissed by the High Court in 2025. They thereafter approached the Supreme Court, which, while dealing with a batch of matters concerning the legality of reassessment notices issued by the JAO instead of through the faceless mechanism, remanded matters to the concerned High Courts.

Pursuant to the Supreme Court's directions, Petitioners sought permission to amend their writ petitions to challenge the constitutional validity of Section 147A, inserted by the Finance Act, 2026. The Delhi High Court allowed the amendments and took the amended writ petitions on record.

Section 147A was introduced with retrospective effect from April 1, 2021. It provides that, for the purposes of Sections 148 and 148A, the expression "Assessing Officer" shall mean an Assessing Officer other than the National Faceless Assessment Centre.

The petitioners contend that prior to the enactment of Section 147A, the scheme framed under Section 151A mandated faceless issuance of reassessment notices and that the JAO did not have jurisdiction to issue such notices outside the faceless mechanism. They have challenged Section 147A on the ground that its retrospective operation seeks to validate such reassessment action.

The petitioners have also argued that Section 147A impermissibly seeks to nullify judicial pronouncements by retrospectively deeming the JAO to have had jurisdiction, while Section 151A and the scheme framed thereunder continue to remain in force.

The Court also rejected an application filed by a person claiming to be the complainant at whose instance the Income Tax Department had initiated the reassessment proceedings. The Court held that the applicant was "nothing more than a complainant" and had no locus to participate in the proceedings, observing that it was the Assessing Officer who had to defend the action under challenge.

For Petitioner: Advocate Ujwal Ghai

For Respondents: Senior Standing Counsel Vipul Agrawal with Advocate Gaoraang Ranjan and Advocate Harshita K.; Senior Standing Counsel Gaurav Gupta with Advocate Shivendra Singh and Advocate Yogit P.