A High Court That Actually Read the Statute: Why the AP High Court's Strike-Down of Section 147A Is Constitutionally Sound — and Long Overdue

The Hook

When Parliament passes a law to undo a court judgment it dislikes, and dresses it up as a "clarification," the constitutional promise of separation of powers is not merely strained — it is mocked. The Andhra Pradesh High Court's Division Bench in Bala Sreenivas Rao Somisetty v. Income Tax Officer (WP No. 28520 of 2023, decided 12.10.2026) has done something that too many constitutional courts shy away from: it called the legislative bluff. Section 147A of the Income Tax Act, 1961 — inserted with retrospective effect from 01.04.2021 to neutralise a string of High Court rulings that had quashed reassessment notices issued by Jurisdictional Assessing Officers (JAOs) — has been struck down as unconstitutional. This is not judicial adventurism. This is judicial duty, discharged with rigour.

What makes this judgment especially significant is its timing. The Punjab and Haryana High Court had already reached the same conclusion on 10.09.2026, only to see its order stayed by the Supreme Court within eight days. The AP High Court, fully aware of that stay, independently examined the question and arrived at the same destination. That takes institutional courage — and it deserves recognition.

The Facts

The factual backdrop is now well-rehearsed across Indian tax litigation. The Finance Act, 2021 introduced Section 144B, embedding faceless assessment into the Income Tax Act, 1961. Section 151A empowered the Central Government to frame schemes for faceless reassessment. Pursuant to this, the CBDT notified the e-Assessment of Income Escaping Assessment Scheme, 2022 on 29.03.2022, which expressly brought the issuance of notices under Section 148 within the faceless framework through automated allocation.

Despite this, JAOs across the country continued issuing Section 148A show-cause notices and Section 148 reassessment notices in the old, jurisdiction-based manner. Assessments were challenged. Multiple High Courts — including a co-ordinate bench of the AP High Court itself on 28.10.2025 — held that the JAO lacked jurisdiction because the scheme mandated faceless proceedings. The Revenue filed SLPs. While those SLPs were pending, Parliament enacted the Finance Act, 2026, inserting Section 147A with retrospective effect from 01.04.2021, declaring that the "Assessing Officer" for Sections 148 and 148A "shall mean and shall always be deemed to have meant" an officer other than the NFAC or any faceless assessment unit.

The Supreme Court, by order dated 10.04.2026, set aside the favourable High Court judgments, remitted the matters to the respective High Courts for fresh consideration in light of Section 147A, and expressly left open the question of the provision's constitutional validity. The petitioners amended their writ petitions to challenge Section 147A itself.

The Arguments

The petitioners' case was built on several pillars. First, the scheme under Section 151A unambiguously included Section 148 within the faceless mechanism — the JAO had no role. Second, Section 147A was not genuinely clarificatory; it was a legislative overruling of judicial decisions, violating the separation of powers. Third, the amendment did not remove the defect identified by the courts — the scheme itself remained unamended, with Section 148 still very much part of it. Fourth, the Income Tax Act, 1961 stood repealed on 31.03.2026 when the Income Tax Act, 2025 came into force on 01.04.2026; the Finance Act, 2026, which itself came into force on 01.04.2026, could not amend a statute that no longer existed.

The Revenue, represented by the Additional Solicitor General, relied on the well-worn doctrine of validating legislation. Parliament, it argued, had plenary power to enact retrospective laws. The twin test for validation — removing the defect and doing so through subsequent enactment — was satisfied. Section 147A's non-obstante clause expressly overrode Section 151A and the scheme. The Revenue also pointed to the staggering scale of reassessment proceedings — over 8.82 lakh notices, Rs. 21.74 lakh crore in assessed income — as a public interest argument against interference.

The Judgment

The Division Bench of Justices Ninala Jayasurya and T.C.D. Sekhar rejected every limb of the Revenue's argument. The Court's reasoning proceeded in three broad movements.

First, on the scheme itself: The Court held that the e-Assessment of Income Escaping Assessment Scheme, 2022, read with Sections 130 and 151A, left no room for doubt — Section 148 proceedings were to be conducted facelessly. The Revenue's argument that the scheme was only about "e-assessment" and not "faceless" assessment was rejected as untenable. The Court was particularly scathing about the Revenue's contradictory positions, observing that it was "blowing hot and cold" to suit its convenience.

Second, on Section 147A as a validating act: This is the analytical core of the judgment. The Court applied the settled test from Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, (1969) 2 SCC 283, and State of Tamil Nadu v. M. Rayappaiah Gounder, (1971) 3 SCC 1: a validating law must remove the defect identified by the court. Here, the defect was not in the scheme — the scheme was fine. The defect was that the JAO acted without jurisdiction because the scheme required faceless proceedings. Section 147A did not amend the scheme. Section 148 remained in the scheme. The provision, therefore, attempted to nullify judicial decisions without removing their basis — a classic case of legislative overreach that violates the separation of powers, which forms part of the basic structure.

Third, on the repeal point: The Court held that the Income Tax Act, 1961 was repealed at midnight on 31.03.2026. The Finance Act, 2026, by its own Section 2(a), came into force on 01.04.2026 — after the 1961 Act had ceased to exist. Relying on Common Cause v. Union of India, (2003) 8 SCC 250, the Court held that Section 5 of the General Clauses Act has no application where the enactment itself specifies a commencement date. An amendment to a repealed statute, the Court concluded, is a legal nullity.

The Critique

Let me be direct: this is a well-reasoned judgment that gets the constitutional analysis right. The Court's identification of the fundamental flaw in Section 147A — that it attempts to override judicial decisions without amending the underlying scheme that formed the basis of those decisions — is precise and devastating. The Revenue's validation argument fails at the threshold because the "defect" the courts identified was not a drafting gap in the statute; it was the Revenue's own non-compliance with a scheme that remains, to this day, unamended.

The Court could have strengthened its analysis on one front. The petitioners' argument about promissory estoppel and legitimate expectation — that assessees had a vested right to faceless assessment — deserved more than passing treatment. The doctrine of legitimate expectation in tax administration is underdeveloped in Indian jurisprudence, and this was a missed opportunity to enrich it.

On the repeal argument, I have some sympathy for the Revenue's position that Section 536 of the Income Tax Act, 2025 contains savings provisions that preserve pending proceedings under the repealed Act. The Court addressed this but could have engaged more deeply with whether Section 536(2)(c) implicitly preserves the Parliament's power to amend the repealed Act for pending matters. The Court's conclusion is defensible, but the reasoning here is thinner than elsewhere in the judgment.

That said, the Revenue's litigation strategy deserves criticism. Having lost before multiple High Courts on the faceless jurisdiction point, the correct approach was to amend the scheme under Section 151A — a power the Government retained until 31.03.2022 under the proviso to Section 151A(2). Instead, the Government allowed the deadline to pass, then attempted a legislative shortcut through Section 147A. This is not governance; it is gamesmanship. The Court was right to refuse to countenance it.

The Revenue's "public interest" argument — citing Rs. 21.74 lakh crore in assessed income — was particularly weak. As the Court correctly noted, the fact that most assessees did not challenge JAO proceedings does not confer jurisdiction where none exists. Jurisdiction cannot be created by acquiescence, and it certainly cannot be created by the sheer volume of unlawful action.

The Takeaway

For practitioners, this judgment — along with the Punjab and Haryana High Court's ruling — establishes a clear line: retrospective amendments that purport to validate executive action without curing the underlying defect identified by courts are constitutionally vulnerable. When advising clients on reassessment proceedings, the first question must always be: was the notice issued through the faceless mechanism mandated by the scheme? If not, the proceedings are void for want of jurisdiction, and Section 147A — now struck down by two High Courts — cannot save them.

For the Revenue, the message is unambiguous: if you want to change the rules, change the rules. Amend the scheme. Do not attempt to legislate away judicial decisions through non-obstante clauses while leaving the very scheme that formed the basis of those decisions untouched. That is not clarification; it is legislative overreach, and constitutional courts will — and should — push back.

The matter is now squarely before the Supreme Court, which has already stayed the Punjab and Haryana judgment. The stakes could not be higher — not just for the 1.46 lakh pending reassessments, but for the broader principle of whether Parliament can nullify judicial decisions by legislative fiat. The AP High Court has done its part. The ball, as it should be, is in the Supreme Court's court.