New Delhi, September 18, 2026 (Yes Punjab News)
The Supreme Court on Friday stayed the operation of a Punjab and Haryana High Court judgment that had declared Section 147A of the Income Tax Act, 1961, unconstitutional and set aside reassessment notices issued by jurisdictional Assessing Officers.
A Bench of Justices J.B. Pardiwala and K. Vinod Chandran passed the interim order while hearing a special leave petition filed by the Union government and Income Tax authorities challenging the High Court’s September 10 judgment.
The Supreme Court directed that the assessment proceedings in question shall not proceed further until final disposal of the main matter. The case has been listed for final hearing on December 3.
The dispute arose from a batch of petitions before the Punjab and Haryana High Court challenging the constitutional validity of Section 147A, which was introduced retrospectively with effect from April 1, 2021, through the Finance Bill, 2026.
The petitioners had argued that the provision was ultra vires Articles 14, 19(1)(g) and 265 of the Constitution. They had also challenged notices issued under Section 148, contending that they were not issued through the automated allocation mechanism prescribed under Section 151A and the scheme framed under it.
In its September 10 judgment, the Punjab and Haryana High Court, through a Division Bench of Justices Deepak Sibal and Rupinderjit Chahal, held that Section 147A could not override the existing statutory framework requiring randomised allocation and faceless proceedings. The court declared the provision unconstitutional and also set aside the Section 148 notices issued by jurisdictional Assessing Officers.
The High Court had noted that Section 147A sought to clarify that, for the purposes of Sections 148 and 148A, an Assessing Officer would mean an officer other than the National Faceless Assessment Centre or an assessment unit referred to under Section 144B.
The matter had earlier reached the Supreme Court, which on April 10 set aside the earlier judgments under challenge on the limited ground that the legislative position had subsequently changed and remitted the cases to the respective High Courts for fresh consideration. The apex court had left open questions relating to the validity, scope, effect, retrospectivity and applicability of Section 147A.
After reconsidering the matter, the Punjab and Haryana High Court held that the retrospective provision did not cure the issue identified in earlier judicial rulings because Section 151A and the faceless assessment scheme dated March 29, 2022, continued to remain in force.
The High Court further held that, even independently of Section 147A, the Section 148 notices issued by jurisdictional Assessing Officers were not sustainable because they had not been issued through the required randomised and faceless allocation process. It consequently allowed the petitions and quashed the notices.
The Union government, the Central Board of Direct Taxes, the Deputy Commissioner of Income Tax and the National Faceless Assessment Centre subsequently approached the Supreme Court against the High Court judgment.
With Friday’s interim order, the High Court judgment remains stayed while the Supreme Court considers the government’s challenge.
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