The Central Government has moved the Supreme Court challenging a Punjab and Haryana High Court judgment that struck down Section 147A of the Income Tax Act as unconstitutional.
The High Court’s ruling invalidated the retrospective amendment and questioned the authority of Jurisdictional Assessing Officers (JAOs) to initiate reassessment proceedings outside the faceless assessment mechanism.
Additional Solicitor General N Venkataraman, representing the Centre, asked for a hearing of the Centre’s special leave petition (SLP) before Chief Justice of India Surya Kant. The CJI agreed to the urgent listing of the case.
Seeking an early hearing, Venkataraman told the court that the High Court’s verdict had created a “huge vacuum” in the law and that taxpayers were closely monitoring the matter.
This legal challenge centres on the statutory mechanism for reassessment proceedings under Sections 148 and 148A of the Income Tax Act.
Specifically, it examines the jurisdictional boundary and allocation of responsibilities between the Jurisdictional Assessing Officer (JAO) and the National Faceless Assessment Centre (NFAC).
This dispute came to the fore following the implementation of the ‘faceless assessment’ system. The core question before the courts was whether jurisdictional officers possessed the authority to independently issue re-assessment notices u/s 148 and pass orders u/s 148A, or if such actions were required to be carried out through the ‘faceless assessment’ system.
The Punjab and Haryana High Court, in Income Tax Officer, Ward 2(1), Chandigarh v Tej Partap Singh, did not validate reassessment proceedings initiated by jurisdictional officers where the mentioned faceless process had not been complied with. Some other High Courts had taken a distinct interpretation of the regulatory scheme.
Against this backdrop, Parliament introduced Section 147A with retrospective effect from April 1, 2021. This provision specified that, for Sections 148 and 148A, the term “Assessing Officer” would refer to an Assessing Officer (AO) other than the ‘National Faceless Assessment Centre’.
The actual objective of this amendment was to preserve the authority of jurisdictional officers to carry out reassessment-related work, notwithstanding earlier court rulings regarding the ‘faceless’ regime.
Afterwards, the Punjab and Haryana High Court analysed the constitutional validity of Section 147A and struck it down. The court stated that the legal position cannot be altered with retrospective effect merely by enacting a law to declare that a situation contrary to earlier judicial findings is valid.
The High Court found that the objective of this provision was not to rectify a legal flaw, but rather to nullify the impact of court judgments that had deemed the earlier re-assessment process legally flawed. Consequently, the Court did not uphold such a retrospective legal amendment.
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The Centre’s challenge in the Supreme Court will now focus on the validity and impact of Section 147A. This includes examining the extent to which Parliament can retrospectively alter the legal basis for re-assessment proceedings following court rulings on the matter.
News Source: www.business-standard.com
