In Jyoti Sareen vs. Union of India & Ors. (2026), Punjab & Haryana High Court's Division Bench of Justics Deepak Sibal and Rupinderjit Chahal delivered a 97-page long judgement dated September 10, 2026, wherein, it concluded that the newly inserted Section 147A of the Income Tax Act, 1961 is unconstitutional. The judgment is reserved on September 8, 2026. The judgement was authored by Justice Sibal.
A large number of f petitioners approached the High Court seeking therein to declare Section 147A of the Income-tax Act, 1961to be ultra vires Articles 14, 19(1) (g) and 265 of the Indian Constitution. After the grant of declaration as above, the petitioners pray for quashing the notices issued to them under Section 148 of the Act by their respective jurisdictional Assessing Officers (AOs). The petitioners submitted that even if Section 147A of the Act is held to have been legally promulgated by the legislature, the impugned notices, issued under Section 148 of the Act, were liable to be set aside because the petitioners’ respective jurisdictional AOs, who issued the impugned notices, were not chosen randomly through automated allocation which violates Section 151A of the Act read with the scheme dated March 29, 2022 framed thereunder.
The petitioner is an Advocate practicing in the High Court. She is an Income Tax Assessee and her PAN number is APRPS8105E. The petitioner being a professional is earning income under the head “Business and Profession”. For the Assessment Year 2020-21, the petitioner filed her Income Tax Return on September 30, 2020. The petitioner’s return was processed. Thereafter, an intimation under Section 143(1) of the Act was received by her. On March 28, 2024, the petitioner received a message on her registered mobile number informing her that some proceedings had been initiated against her by the Income Tax Authorities and in this regard she was advised to go on to the Income Tax Business Application Portal. On doing so, the petitioner found that a notice dated March 15, 2024, under Section 148 of the Act, had been issued to her by her jurisdiction AO. As per the said notice the petitioner’s jurisdictional AO had received information that on March 14, 2022 a search had been conducted under Section 132 of the Act in the case of the petitioner or in the case of a person in respect of which the petitioner was assessable. To reassess her income, for the assessment year 2020-21, the petitioner was asked to file a return in the prescribed form. As per the said notice, the same had been issued after obtaining prior approval from the Principal Commissioner of Income Tax, Chandigarh-I but the petitioner claims that no such approval was provided to her. Through the notice dated March 15, 2024, issued under Section 148 of the Act, the petitioner was not informed the reasons as to why such proceedings had been initiated against her. According to the petitioner, since no proceedings under Section 132 of the Act had been conducted on any of her premises, she was also ignorant as to who was the person on whose premises search proceedings under Section 132 of the Act had been conducted leading to the issuance of notice under Section 148 of the Act to her. On June 28, 2024 the petitioner received an intimation informing her that proceedings against her shall be conducted in a faceless manner. The petitioner challenged the notice dated March 15, 2024, issued under Section 148 of the Act, through filing of a petition before this Court being CWP-15791-2024 which petition was allowed by a Division Bench of this Court through judgment dated July 19, 2024 primarily for the reason that the impugned notice issued by the petitioner’s jurisdictional AO violated Section 151A of the Act read with the scheme framed thereunder dated March 29, 2022. The reliance placed upon by the respondent authorities on an office memorandum and other internal communications to justify issuance of the impugned notice by the petitioner’s jurisdictional AO was rejected in the light of the clear mandate under Section 151A read with Section 144B of the Act. To arrive at its afore conclusion, the High Court Court agreed with and relied upon the law laid down, in similar facts, by the Telangana High Court in Kankanala Ravindra Reddy vs. Income-tax Officer and others, 2023 SCC OnLine TS 4476, the Bombay High Court in Hexaware Technologies Ltd. vs. Assistant Commissioner of Income-tax & others, 2024 SCC OnLine Bom 1249 and the Gauhati High Court in Ram Narayan Sah vs. Union of India and others, 2024 SCC OnLine Gau 1424.
The judgment of the High Court dated July 19, 2024 was challenged by the respondents before the Supreme Court through filing of Special Leave Petition (C) No.000950-2025. However, while the afore Special Leave Petition, along with other Special Leave Petitions, was pending before the Supreme Court, through the Finance Bill, 2026, Section 147A of the Act was promulgated w.e.f. April 1, 2021. Section 147A started with a non-obstante clause that notwithstanding anything contained in any judgment, order or decree of any court or in Section 151A or in any scheme framed under Section 151A, for the removal of doubts, it was clarified through Section 147A that the Assessing Officer, for the purposes of sections 148 and 148A, shall mean and shall always be deemed to have meant to be an Assessing Officer other than the
National Faceless Assessment Centre or any assessment unit referred to in sub- section (3) of section 144B.
In the light of the introduction of Section 147A of the Act, the Supreme Court set aside the judgment(s) impugned before it and remitted the matters to the respective jurisdictional High Courts for fresh consideration. The assessees were granted liberty to amend their writ petitions, if so advised, within four weeks from the date of uploading of the order of the Supreme Court dated April 10, 2026 so as to enable them to lay challenge to Section 147A of the Act. The Supreme Court clarified that it had not expressed any opinion on the merits of the controversy, including the validity, scope, effect, retrospectivity or applicability of the amended provision and that all such questions were left open to be decided by the respective jurisdictional High Courts. The High Courts were requested to decide the matters preferably by September 30, 2026 and in the meanwhile interim stay of further assessment/reassessment proceedings pursuant to the notice impugned by the assessees was granted. However, such grant of interim stay was subject to further terms and conditions, if any, to be imposed by the respective jurisdictional High Courts. Operative part of the order of the Supreme Court dated April 10, 2026 reads as follows: -
“21. It appears to us that the assessees would be entitled to challenge the amending provisions as elaborated upon heretofore, for which it would only be appropriate to relegate them to the jurisdictional High Courts. All contentions raised before us, as well as any other grounds available to them to question the impugned notices, may be urged before the High Courts instead.
22. Since the High Courts have primarily quashed the reassessment notices on the ground that the JAOs lacked competence to initiate such proceedings, and the very foundation of that view now stands altered by the amending legislation, the impugned judgments in favour of the assessees are set aside on this limited ground. The matters areaaccordingly remitted to the respective High Courts for fresh consideration. Ordered accordingly.
23. The assessees are granted liberty to amend their writ petitions, if so advised, within a period of four (4) weeks from the date of uploading of this order, so as to enable them to lay challenge to Section 147A of the IT Act, as introduced by Act No. 4 of 2026, or to any other connected or consequential provision.
24. Similarly, the Appellant-Revenue shall be at liberty to file their written submissions and affidavits before the jurisdictional High Courts within a period of three (3) weeks thereafter.
25. No additional time shall be granted to the parties beyond what has been granted above.
26. We make it clear that we have not expressed any opinion on the merits of the controversy, including the validity, scope, effect, retrospectively or applicability of the amended provisions, and all such questions are left open to be decided by the High Courts.
27. Finally, during the pendency of the writ petitions before the High Courts, there shall be an interim stay of further assessment/reassessment proceedings pursuant to the impugned notices, subject to such terms and conditions as may be imposed by the High Courts.
28. The High Courts are requested to decide the matters preferably by 30.09.2026. Learned counsel for the parties undertake to extend full cooperation to the High Courts in this regard. No adjournments may be
granted by the High Courts on mere asking of the parties.
29. The Registry shall forthwith transmit a copy of this order to the Registrars General of the concerned High Courts.
30. The appeals are, accordingly, disposed of.”
In terms of the liberty granted by the Supreme Court through its order dated April 10, 2026, the petitioner amended her original petition to include therein the challenge to the newly introduced Section 147A of the Act.
The counsels who appeared on behalf of the petitioners, submitted that the Bombay High Court through its judgments in Hexaware Technologies Ltd.’s case (supra) and Kairos Properties Pvt. Ltd.vs. Assistant Commissioner of Income Tax and others, 2024 SCC OnLine Bom 2571, the Punjab and Haryan High Court through its judgments pronounced in Jatinder Singh Bhangu & another vs. Union of India & others, 2024 SCC OnLine P&H 9337 and Jasjit Singh vs. Union of India and others, 2024 SCC OnLine P&H 9677, the Telangana High Court in Kankanala Ravindra Reddy’s case (supra) and the Gauhati High Court in Ram Narayan Sah’s case (supra), after analyzing the provisions of the Act, categorically held that in the light of Section 151A of the Act read with the scheme framed thereunder dated March 29, 2022, notices under Section 148 of the Act could only be issued by a Faceless Assessment Officer; without amending Section 151A of the Act and/or the scheme framed thereunder dated March 29, 2022 and thus without curing the defect pointed out by the constitutional courts through the afore referred judgments, through the retrospective enactment of Section 147A, the legislature could not nullify the effect of the judgments delivered by the constitutional courts; promulgation of Section 147A of the Act by the legislature, without amending Section 151A and Section 130 of the Act and/or the schemes framed thereunder is a glaring example of legislative outreach and breach of separation of powers between the legislature and the judiciary which the Indian Constitution clearly seeks to maintain; simply because Section 147A of the Act begins with a non-obstante clause, it cannot nullify the effect of law laid down by the constitutional courts; Section 151A of the Act read with the scheme framed thereunder dated March 29, 2022, which still exists in the Act, clearly provides that notices under Section 148 of the Act are required to be issued randomly through automated allocation and in a faceless manner and in the light of such clear mandate of law the “clarification” sought to be made through the introduction of Section 147A of the Act is in direct conflict with such substantive provisions within the same Act.
It was submitted that Section 147A of the Act is also in conflict with Section 130 of the Act read with the scheme framed thereunder dated 28.03.2022 as per which all the functions and duties by Income Tax authorities are required to be done through the faceless regime in terms of Section 144B of the Act; as per the memorandum attached to the Finance Bill, 2026 through which Section 147A of the Act was introduced, Section 147A was promulgated by the legislature to achieve certainty and clarity as also to avoid litigation but introduction of Section 147A of the Act has resulted in everything to the contrary.
It was also submitted that since there were divergent views expressed by different High Courts as to whether notices under Section 148 of the Act could be issued by the assessees’ jurisdictional AOs, there were cross Special Leave Petitions, filed by the respective aggrieved parties, pending before the Supreme Court at the time when Section 147A was introduced. In the light of these facts, the revenue should have invited an opinion of the Supreme Court which would have granted a final closure to this issue rather than retrospective enactment of Section 147A which has resulted in breeding of litigation across the length and breadth of this country before different High Courts and which litigation is not likely to end with judgment(s) to be rendered by the jurisdictional High Court(s); partial implementation of the faceless regime at the assessment/ reassessment stage defeats the entire purpose behind introduction of the faceless regime; even the timing of introduction of Section 147A of the Act by the legislature when the issue as to whether an assessee’s jurisdictional AO could issue a notice under Section 148 of the Act was pending adjudication before the Supreme Court was not appropriate because by doing so the respondents have literally stalled an opinion by the Supreme Court which in the afore facts was highly desirable and that Section 147A of the Act is also arbitrary because it artificially bifurcates the different stages of assessment especially when proceedings under Sections 148 and 147 of the Act are statutorily required to be an integral part of the same process.
The submissions made by the counsels for the petitioner(s) was that even if the High Court does not find favour with the submissions made on behalf of the petitioner(s) with regard to the challenge to the vires of Section 147A of the Act still the impugned notices issued under Section 148 of the Act are liable to be set aside as they have not been issued by AOs chosen randomly by way of automated allocation in terms of Section 151A of the Act read with the scheme framed thereunder dated March 29, 2022. In support of their submissions, reliance was placed by counsel of the petitioners on the following judgments: -
1. NHPC Ltd. Vs. State of Himachal Pradesh Secretary and others, (2023) 17 SCC 1
2. Janapada Sabha Chhindwara Vs. Central Provinces Syndicate Ltd. and another, (1970) 1 SCC 509
3. State of Tamil Nadu Vs. State of Kerala and another, (2014) 12 SCC 696
4. S.R. Bhagwat and others Vs. State of Mysore, (1995) 6 SCC 16
5. Commissioner of Income Tax (Central)-I, New Delhi Vs. Vatika Township Private Ltd., (2015) 1 SCC 1
6. S.T. Sadiq Vs. State of Kerala and others, (2015) 4 SCC 400
7. Tata Motors Ltd. Vs. State of Maharashtra and others, (2004) 5 SCC 783
8. State of Karnataka and others Vs. Karnataka Pawn Brokers Association and others, (2018) 6 SCC 363
9. Central Provinces Manganese Ore Co. Ltd. Vs. Commissioner of Income-tax (1986), 3 SCC 461
10.M/s Hiralal Rattanlal Vs. State of U.P. and another, (1973) 1 SCC 216
The judgement of the Punjab & Haryana High Court reads:"....Through and even after the retrospective enactment of Section 147A, Section 151A of the Act and the scheme framed thereunder continue to exist on the statute book and without any amendment. Thus, the primary basis on which the constitutional courts had held that notices issued under Section 148 of the Act could not have been issued by the assessees’ jurisdictional AOs has not been removed through the retrospective enactment of Section 147A. Without amending Section 151A of the Act or the scheme framed thereunder, the “clarification” made by the legislature through the retrospective enactment of Section 147A that Assessing Officers for the purpose of issuance of notices under Section 148 of the Act mean and shall always deemed to have meant to be Assessing Officers other than the faceless AOs is in defiance of and in conflict with the law laid down by the constitutional courts. Through such “clarification”, the legislature visibly seeks to substitute its opinion over and above the findings returned by the constitutional courts which is legally impermissible. Section 147A is also clearly found to be in direct conflict with Section 151A, read with the scheme framed thereunder, all of which provisions simultaneously exist in the same statute. In the absence of any amendment to Section 151A and/or the scheme framed thereunder, simply because Section 147A begins with a non-obstante clause, would not make its retrospective enactment pass the test of a constitutionally enacted validation law. Rather, by the retrospective enactment of Section 147A, in the manner in which it has been done, the legislature has clearly trenched upon judicial power and through the introduction of Section 147A the legislature directly seeks to upset findings returned through judgments of several constitutional courts. The attempt by the legislature is clearly to circumvent unfavourable judicial decisions. Even today, if a matter is listed before the constitutional courts which rendered the afore verdicts as to who is the competent Assessing Officer to issue a notice under Section 148 of the Act, there would be no change in the rendering of the above referred verdicts because such verdicts were primarily based on Section 151A and the scheme framed thereunder dated 29.03.2022 which provision and the scheme still continue to exist on the statute book as they existed at the time when the judgments of the constitutional courts were rendered. In the light of the considered and categoric findings returned by the constitutional courts after carefully analyzing Section 151A of the Act and the scheme framed thereunder that only a faceless AO can issue a notice under Section 148 of the Act, the “clarification” which is in clear defiance of and contrary to the afore findings, made by the legislature through the retrospective enactment of Section 147A of the Act would be of no help to the respondents."
The judgement added:"The “clarification” made through the retrospective enactment of Section 147A was that an Assessing Officer, for the purpose of issuance of notice under Section 148 of the Act, meant and was always deemed to have meant to be an Assessing Officer other than the faceless AO. Such “clarification” was in conflict with the findings returned by as many as nine constitutional courts of this country to the effect that as per Section 151A of the Act and the scheme framed thereunder only a faceless AO could issue a notice under Section 148 of the Act. Section 151A and/or the scheme framed thereunder continue to exist on the statute book simultaneously with Section 147A. Therefore, introduction of Section 147A of the Act did not bring any clarity or certainty. It only added to the confusion. The other purpose behind enactment of Section 147A of the Act was to avoid litigation but such enactment became the breeding ground of litigation as thousands of petitions on the issue in question are pending in at least in eight different High Courts across the length and breadth of this country and that such litigation is also not likely to end before the respective High Courts because the parties aggrieved by the judgment of the respective jurisdictional High Courts would likely take up the matter before the Supreme Court. If it is a judgment of the Supreme Court which is ultimately going to give a quietus to the entire matter then rather than, for the afore “objects”, retrospectively enacting Section 147A, it was desirable for the respondents to
have invited an early opinion of the Supreme Court at the time when cross petitions were pending before the Supreme Court, filed by the respective parties aggrieved by the divergent views expressed by different jurisdictional High Courts as that would have finally put a lid on this issue. 63. In the light of the afore discussion, we have no hesitation to declare Section 147A of the Act to be unconstitutional. "
The High Court concluded: "79. In the light of the above discussion, after holding Section 147A of the Act to be unconstitutional and directing it to be struck down, we further order setting aside of the notices issued to the petitioner(s) under Section 148 of the Act because such notices have not been issued through the process of randomized allocation of assessing officers and in a faceless manner as is mandated under Section 151A of the Act read with the scheme framed thereunder dated 29.03.2022."
Notably, Section 147 A provision was introduced retrospectively to clarify the role of the Jurisdictional Assessing Officer (JAO) in reassessment proceedings. 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 in the Act was in reaction to the JAO-FAO controversy. It 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 adverse High Court order was appealed in the Supreme Court. While the batch of appeals was pending, Parliament had introduced Section 147A with retrospective effect, seeking to clarify the statutory position and validate reassessment action undertaken by Jurisdictional Assessing Officers.
