Supreme Court stays Punjab and Haryana High Court ruling on Section 147A of Income Tax Act

The Supreme Court has temporarily halted a Punjab and Haryana High Court decision declaring Section 147A unconstitutional, delaying reassessment proceedings in India’s faceless tax regime until a final verdict in December 2026.

The Supreme Court on Friday put on hold a Punjab and Haryana High Court ruling that had declared Section 147A of the Income Tax Act unconstitutional, while also ordering that the reassessment proceedings at the centre of the dispute must remain paused until the case is finally decided. The bench of Justices Alok Aradhe and K Vinod Chandran passed the interim order while hearing the Union government’s special leave petition and set the matter down for final hearing on 3 December 2026.

The case concerns the continuing battle over reassessment powers under India’s faceless tax regime. At issue is whether a jurisdictional Assessing Officer could act independently to issue notices under Sections 148 and 148A, or whether those steps had to go through the National Faceless Assessment Centre. Several high courts had held that reassessment actions taken outside the faceless process were invalid, but the government introduced Section 147A retrospectively from 1 April 2021 to clarify that the term “Assessing Officer” in those provisions meant an officer other than the NFAC.

The Punjab and Haryana High Court had rejected that attempt, saying Parliament could not use retrospective legislation to erase findings already reached by constitutional courts. It held that the amendment did more than alter the law for the future: it sought to validate earlier reassessment proceedings that had already been found defective. The Supreme Court’s stay means the provision remains in force for now, but the disputed assessment machinery cannot move ahead until the top court rules on the Centre’s challenge.