Retrospective Insertion Of Section 147A Validates Jurisdiction Of JAO To Initiate And Conduct Reassessment Proceedings

Retrospective Insertion Of Section 147A Validates Jurisdiction Of JAO To Initiate And Conduct Reassessment Proceedings

Issue

Facts

• Period of Proceedings: Reassessment proceedings and orders spanned Assessment Years 2014-15 to 2017-18 and 2018-19 to 2022-23.
• Writ Challenge: Assessees filed writ petitions challenging notices under Sections 148A/148 and reassessment orders passed under Section 147 on the ground that the Jurisdictional Assessing Officer (JAO) lacked statutory jurisdiction between April 1, 2021, and April 1, 2024.
• Legislative Amendment: During the pendency of these writ petitions, Section 147A was inserted into the Income-tax Act by the Finance Act, 2026, with retrospective operation starting from April 1, 2021.
• Statutory Effect: Section 147A validated the power and jurisdiction of JAOs to initiate, conduct, and finalize reassessment proceedings for the relevant period.

Decision

• Validity of JAO Jurisdiction: In favor of Revenue. In light of the retrospective insertion of Section 147A from April 1, 2021, the JAO possessed valid jurisdiction to issue reassessment notices and pass Section 147 orders.
• Dismissal of Writ Petitions: In favor of Revenue. The writ petitions challenging the initiation, continuation, and completion of reassessment proceedings were dismissed.
• Interim Protection on Recovery: Recovery proceedings pursuant to the reassessment orders were ordered to remain in abeyance for 30 days from the date of receipt of the order copy, enabling the assessees to approach a Division Bench or challenge the constitutional validity (vires) of Section 147A.

Key Takeaways

• Curing Jurisdictional Defects Retrospectively: Legislative insertion of validating provisions like Section 147A with retrospective effect cures underlying jurisdictional challenges to notices and orders issued by JAOs.
• Rejection of Formality Challenges: Reassessment actions taken between April 1, 2021, and April 1, 2024, stand validated under the umbrella of Section 147A, neutralizing jurisdictional objections raised by taxpayers.
• Temporary Relief for Further Appeal: Dismissal of writ petitions on statutory grounds can be accompanied by a temporary freeze on tax recovery to allow assessees to challenge the validity of the retrospective amendment before higher benches.