NEW DELHI/CHANDIGARH, SEPT 18: In a major development for direct tax administration, the Supreme Court stayed the high court decision invalidating Section 147A of the Income Tax Act. The order temporarily restores the provision inserted by Parliament, though the bench explicitly instructed revenue authorities not to proceed with active assessment or reassessment cases until the constitutional challenge is formally resolved.
The dispute stems from conflicting interpretations regarding Section 151A and the e-Assessment scheme, which mandated automated, faceless case allocation for reopening tax assessments. While Parliament enacted Section 147A to validate notices issued by local jurisdictional officers, the Punjab and Haryana High Court ruled that retrospective validation without curing underlying procedural defects was unconstitutional.
Addressing the Union government’s appeal, the apex court bench acknowledged the need to resolve the uncertainty surrounding reassessment notices issued nationwide. By freezing reassessment proceedings while keeping the law nominal pending final arguments in December, the court aims to establish a clear, binding precedent on the powers of local versus faceless tax authorities.
