The Union Government has approached the Supreme Court over Section 147A Income Tax provisions. It has challenged the Punjab and Haryana High Court’s recent judgment declaring Section 147A of the Income Tax Act unconstitutional. The provision concerns the authority to initiate reassessment proceedings under Sections 148 and 148A.
Additional Solicitor General N Venkataraman mentioned the Union’s Special Leave Petition before Chief Justice of India Surya Kant. He sought an urgent listing of the matter. CJI Surya Kant agreed to list the case urgently.
During the mentioning, the ASG said the High Court ruling had created a significant gap in the reassessment framework. He stated that 99.9% of the assessee community was following the law both before and after the change. He also informed the Court that the Centre had filed an SLP against the Punjab and Haryana High Court judgment.
The ASG requested the Court to list the matter on Friday. According to him, the judgment had created a “huge vacuum in law.”
Dispute Over JAO and Faceless Assessment Regime
The dispute concerns the powers of the Jurisdictional Assessing Officer (JAO). It also involves the Faceless Assessing Officer and the National Faceless Assessment Centre (NFAC).
Under the faceless assessment regime, courts considered the authority of a JAO to issue reassessment notices independently. The controversy specifically involved notices under Section 148 and orders under Section 148A.
One view required authorities to perform these functions through the prescribed faceless mechanism. Several High Courts adopted this position. They invalidated reassessment proceedings initiated by JAOs when authorities failed to follow the faceless procedure.
However, other High Courts reached a different conclusion. This resulted in divergent judicial views on the reassessment framework.
Parliament Introduces Section 147A Retrospectively
Parliament later inserted Section 147A with retrospective effect from April 1, 2021. The amendment addressed the controversy surrounding reassessment proceedings.
The provision clarified the meaning of “Assessing Officer” for Sections 148 and 148A. It stated that the term refers to an Assessing Officer other than the National Faceless Assessment Centre.
In practical terms, Parliament sought to confirm the authority of jurisdictional officers to conduct these reassessment proceedings.
The Supreme Court had earlier considered cases arising from the JAO-FAO controversy. It remitted the matters to the respective High Courts for fresh consideration following the insertion of Section 147A.
P&H High Court Declares Section 147A Unconstitutional
The Punjab and Haryana High Court subsequently declared Section 147A unconstitutional. The Court examined whether Parliament could retrospectively validate the disputed legal position.
The High Court held that the legislature could not simply declare that a particular position had always been valid. Constitutional courts had previously found defects in the relevant procedure.
According to the High Court, the amendment sought to circumvent those judicial findings. It therefore struck down the provision.
The Centre has now challenged the ruling before the Supreme Court. Its Special Leave Petition places the constitutional dispute over Section 147A Income Tax before the apex court.
