The Supreme Court on Friday
stayed a recent Punjab and Haryana High Court judgment that had declared
Section 147A of the Income Tax Act unconstitutional.
A
Bench comprising Justices Alok Aradhe and K Vinod Chandran passed the order
while hearing a special leave petition (SLP) filed by the Union government
challenging the High Court ruling. The stay will remain in force until the Supreme Court
finally decides the matter.
The
court directed that the assessment proceedings in question should not proceed
further during this period. It also scheduled the matter for final hearing on
December 3, 2026.
The
order stated: “The impugned judgment and order passed by the High Court shall
remain stayed on the condition that the assessment proceedings shall not
proceed further till the final disposal of the main matter.
The case was listed for urgent hearing after
Additional Solicitor General N Venkataraman mentioned it before the Chief
Justice of India two days ago.
Dispute over
faceless assessment
The case arises from a dispute
over the powers of the jurisdictional Assessing Officer (JAO) under the
faceless assessment regime.
The issue was whether a JAO
could independently issue reassessment notices under Section 148 and pass
orders under Section 148A of the Income Tax Act,
or whether such actions had to be undertaken through the prescribed faceless
assessment mechanism involving the National Faceless Assessment Centre (NFAC).
Several High Courts, including
the Punjab and Haryana High Court, had held that reassessment proceedings
initiated by JAOs without following the faceless procedure were invalid.
However, courts in some other jurisdictions took a different view.
Parliament introduced Section
147A retrospectively from April 1, 2021. The provision sought to clarify that
references to an “Assessing Officer” in Sections 148 and 148A would mean an
Assessing Officer other than the NFAC.
The amendment effectively sought
to establish that jurisdictional officers could undertake reassessment
proceedings despite the faceless assessment framework.
Why P&H High
Court struck down provision
The Punjab and Haryana High
Court had held that Parliament could not retrospectively alter the legal
position in a manner that effectively nullified findings already reached by
constitutional courts.
The High Court had reasoned that
the amendment did not merely change the law prospectively but sought to
validate, with retrospective effect, reassessment proceedings that had been
found legally defective because they were initiated outside the prescribed
faceless mechanism.
The
High Court consequently held Section 147A unconstitutional.
The
Union government challenged that ruling before the Supreme Court, leading to
Friday’s interim stay.