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Informist, Friday, Sept. 18, 2026

 

NEW DELHI – The government Friday told the Supreme Court that INR 21.34 trillion of revenue was at stake after the Punjab and Haryana High Court on Sept. 10 struck down section 147A of the Income Tax Act, 1961, which stated that from Apr. 1, 2021, jurisdictional assessing officers, and not the faceless system, were the right authority to issue reassessment notices. The high court's order has opened a Pandora's box and caused nationwide catastrophe and administrative chaos, the government said.

 

Earlier in the day, the Supreme Court stayed the high court's order that struck down section 147A of the Income Tax Act, subject to the tax department not proceeding with assessment and reassessment proceedings till final disposal of the matter. The court will hear the case next on Dec. 3. 

 

In its petition, the government said that the high court's order interferes with the day-to-day functions of income tax authorities and restricts them severely. A total of 882,146 notices under Section 148 of the Income Tax Act were issued across India for assessment years 2016-17 (Apr-Mar) to 2025-26, 0.1271% of the 694.06 million returns filed, said the government. Out of these, reassessment orders stand passed in 646,897 cases, raising demand of INR 17.40 trillion. Around 146,544 cases remain pending, and the total revenue at stake is INR 21.34 trillion, it said. Over 99.8% of assessees complied with their jurisdictional assessing officers without demur, it said.

 

The high court's judgment has far-reaching consequences on the resources of the nation, said the government. When 99.8% of the assessees have not objected to the jurisdictional assessing officers issuing section 148 notices, and the provisions as such are in place and in practice, a miniscule number of assessees constituting less than 0.2% are seeking to unsettle the law which the high court has permitted and facilitated, said the government. The high court's judgment will not only affect past notices, but also affect the notices to be issued in the future since the same framework is also carried forward under the Income Tax Act, 2025, which came into effect from Apr. 1. Therefore, unless the high court's judgment is stayed from its operation, it will create a complete hiatus and perpetuate a position of vacuum created earlier by conflicting judgments, it said.

 

Section 147A of the Income Tax Act, 1961, was inserted through the Finance Bill 2026, with the government's stated aim of avoiding confusion as the new Income Tax Act, 2025, which was about to come into force in April this year. It clarifies that for sections 148 and 148A, which allow the tax department to reopen past assessments if they believe income escaped taxation, an assessing officer means a physical, jurisdictional officer.      

 

The high court had quashed a bunch of reassessment tax notices given to assessees. The high court had said that these notices have not been issued through the process of randomised allocation of assessing officers and in a faceless manner as is mandated under section 151A of the Income Tax Act read with the faceless assessment scheme framed on Mar. 29, 2022.  

 

The case has its genesis in advocate Jyoti Sareen filing her income tax return for assessment year 2020-21 (Apr-Mar). Thereafter, Sareen was informed that some proceedings had been initiated against her by the income tax authorities and in this regard, she was advised to go to the Income Tax Business Application Portal. On doing so, the petitioner in March 2024 found that a notice under section 148 of the Act, relating to reassessment of her income, had been issued to her by the jurisdiction assessing officer.

 

Challenging the notice for reassessment of her income, the petitioner moved the high court, saying the faceless assessment scheme should have been followed by tax authorities. While the case was pending, various high courts held that reassessment notices could only be issued by a faceless assessment officer. The high courts had held that section 151A of the Act read with the faceless assessment scheme, which still exists in the Income Tax Act, clearly provides that reassessment notices 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 is in direct conflict with such substantive provisions within the same Income Tax Act, they said.  End

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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