The Punjab & Haryana High Court has declared Section 147A of the Income-tax Act, 1961 unconstitutional, striking down the provision inserted by the Finance Act, 2026, with retrospective effect from April 1, 2021.
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Core Issue & Legislative Intent: Multiple High Courts previously held that notices under Section 148 must be issued through the faceless random allocation scheme (FAO) under Section 151A, rather than by Jurisdictional Assessing Officers (JAOs). To counteract this, Parliament enacted Section 147A to define “Assessing Officer” as excluding the National Faceless Assessment Centre (NFAC), attempting to retrospectively validate notices issued by JAOs.
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Separation of Powers: The Court held that the legislature cannot directly overturn or nullify constitutional court judgments via retrospective amendments without removing the underlying legal basis of those decisions.
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Defect Not Cured: The amendment merely excluded NFAC from the definition of “Assessing Officer” while leaving Section 151A and the notified e-Assessment of Income Escaping Assessment Scheme, 2022 intact.
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Outcome: Because the statutory mandate for automated, dynamic allocation under Section 151A remains unaltered, JAOs cannot unilaterally issue Section 148 notices, rendering Section 147A invalid.