Amending a Ghost: Why the AP High Court's Takedown of Section 147A Is Constitutionally Sound — and Why It May Not Survive the Supreme Court

A Parliament That Cannot Read Its Own Statute Book

There is a special category of legislative embarrassment reserved for amendments made to statutes that no longer exist. The Andhra Pradesh High Court's judgment in Bala Sreenivas Rao Somisetty v. Income Tax Officer, WP No. 28520 of 2023 (decided 12.10.2026), is a story of precisely such an embarrassment — compounded by a constitutional overreach so brazen that the Division Bench of Justices Ninala Jayasurya and T.C.D. Sekhar had little difficulty striking down Section 147A of the Income Tax Act, 1961 as unconstitutional.

Let me be direct: this is a well-reasoned judgment that correctly identifies two independent fatal defects in the impugned amendment. But it is also a judgment resting on a technical ground — the repeal argument — that the Supreme Court may find too clever by half. Practitioners should savour this victory but not bank on it.

The Facts: A Batch of 150+ Petitions and a Legislative Ambush

The factual matrix, stripped to essentials, is this. The petitioners — over 150 assessees across Andhra Pradesh — received notices under Sections 148A and 148 of the Income Tax Act, 1961 from their Jurisdictional Assessing Officers (JAOs). The problem: the e-Assessment of Income Escaping Assessment Scheme, 2022, notified under Section 151A, mandated that all proceedings under Sections 147 and 148 be conducted in a faceless manner through the National Faceless Assessment Centre (NFAC). The JAOs had no business issuing these notices.

A co-ordinate bench of the AP High Court agreed, quashing the notices on 28.10.2025. The Revenue filed SLPs. While those SLPs were pending, Parliament did something extraordinary: it enacted Section 147A through the Finance Act, 2026, declaring with retrospective effect from 01.04.2021 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 then disposed of the SLPs, set aside the High Court judgments, and remitted the matters for fresh consideration — with liberty to challenge the new Section 147A.

The petitioners amended their writ petitions. The battle was joined.

The Arguments: A Familiar Playbook on Both Sides

The petitioners' counsel — a veritable army of sixteen advocates — mounted a multi-front attack. Their core contentions were: (a) Section 147A was not clarificatory but an attempt to nullify judicial decisions without removing their basis; (b) it violated the doctrine of separation of powers by legislatively overruling High Court judgments; (c) the scheme under Section 151A remained unamended, so the foundation of those judgments stood intact; and (d) critically, the Income Tax Act, 1961 had been repealed on 31.03.2026 by the Income Tax Act, 2025, which came into force on 01.04.2026 — the very date the Finance Act, 2026 also came into force. You cannot amend a dead statute.

The Revenue, represented by the ASG, relied on the well-worn validating legislation doctrine: Parliament has plenary power to enact retrospective amendments; the twin test from Prithvi Cotton Mills v. Broach Borough Municipality, (1969) 2 SCC 283, was satisfied because the "defect" — judicial interpretation favouring faceless jurisdiction — was removed; and fiscal legislation enjoys a strong presumption of constitutionality. The Revenue also filed an additional affidavit citing staggering figures: reassessment orders against 6.47 lakh assessees yielding Rs. 21.74 lakh crore in assessed income, arguing that public interest militated against interference.

The Judgment: Two Independent Kill Shots

The Division Bench struck down Section 147A on two independent grounds, each sufficient on its own.

First, the separation of powers ground. The Court held that the Legislature cannot nullify a judicial decision without removing its basis. The various High Courts had quashed JAO notices because Section 148 was included in the 2022 Scheme, mandating faceless proceedings. That scheme was never amended. Section 147A purported to override the scheme through a non-obstante clause, but the scheme itself — the very foundation of the judicial decisions — remained intact. The Court relied on State of Tamil Nadu v. M. Rayappaiah Gounder, (1971) 3 SCC 1, which holds that while the Legislature can remove the basis of a court's decision, it cannot simply render the decision ineffective by legislative fiat.

"Without amending the said scheme, any clarification or validation through amendment cannot be permitted especially when the basis is not removed. Therefore, by introducing Section 147A of the Act, the Legislature is trying to over reach the judgments rendered by various High Courts in this regard, in direct conflict with Doctrine of separation of powers."

Second, the repeal ground. This is the more novel — and more vulnerable — holding. The Court noted that the Income Tax Act, 2025 came into force on 01.04.2026, repealing the 1961 Act. The Finance Act, 2026 also came into force on 01.04.2026 (per Section 2(a) thereof), notwithstanding that it received Presidential assent on 30.03.2026. Relying on Common Cause v. Union of India, (2003) 8 SCC 250, the Court held that where an Act expressly provides its commencement date, Section 5 of the General Clauses Act does not apply. Therefore, on the date Section 147A was "inserted" into the 1961 Act, that Act had already been repealed. You cannot amend a statute that no longer exists.

The Critique: Right Result, But One Leg Is Shakier Than the Other

I agree with the judgment's core holding on separation of powers. This is not a close call. The Legislature's own scheme under Section 151A — which it never bothered to amend — mandated faceless proceedings for Section 148 notices. The proviso to Section 151A(2) even set a deadline of 31.03.2022 for modifying the scheme. That deadline passed. The scheme stood. The Courts correctly enforced it. Parliament cannot now leapfrog its own unamended subordinate legislation with a retrospective "clarification" and claim it is removing the basis of judicial decisions. That is not validation; it is legislative overruling — precisely what Rayappaiah Gounder prohibits.

The Revenue's invocation of the twin test from Prithvi Cotton Mills was, frankly, disingenuous. That test requires the Legislature to remove the defect identified by the Court. The "defect" here was not a drafting error or an ambiguity — it was the scheme itself, which the Legislature chose to include Section 148 within. If Parliament wanted JAOs to issue Section 148 notices, the honest course was to amend the scheme. It did not. Instead, it drafted a non-obstante clause overriding the very scheme it left intact. That is legislative sleight of hand, and the Court was right to call it out.

Where I have reservations is the repeal argument. The Court's logic is formally impeccable: the Finance Act, 2026 says it comes into force on 01.04.2026; the 1961 Act was repealed at midnight on 31.03.2026; therefore, the Finance Act amended a repealed statute. But this argument has a significant vulnerability. Section 536 of the Income Tax Act, 2025 contains elaborate repeal-and-savings provisions, including Section 536(2)(c), which provides that the repealed Act "shall continue to apply" to pending proceedings and proceedings initiated after 01.04.2026 in respect of pre-2026 tax years. If the repealed Act "continues to apply" for these purposes, the argument that it cannot be amended for those same purposes becomes considerably weaker. The Court acknowledged Section 536 but did not fully grapple with how its savings clause interacts with the repeal argument. This is where the Supreme Court will focus its attention.

There is also a practical concern. The Court struck down Section 147A ab initio — from the date of its inception. This means every JAO notice issued under Sections 148A and 148 since 01.04.2021 is potentially void. The Revenue's affidavit quantified the exposure: 8.82 lakh notices, 6.47 lakh reassessment orders, Rs. 21.74 lakh crore in assessed income. The Court dismissed this airily — "merely because there was no challenge... will not give any right to the Revenue." That is doctrinally correct but practically tone-deaf. The Supreme Court, which has already stayed the Punjab & Haryana High Court's similar judgment, will be acutely aware of the fiscal chaos that a nationwide invalidation would unleash.

What the petitioners could have argued differently: The petitioners relied heavily on legitimate expectation and promissory estoppel — doctrines that have limited traction in tax matters. A sharper argument, which the Court essentially adopted on its own motion, would have been the Article 14 arbitrariness ground: if the Legislature's stated purpose in introducing faceless assessment was to eliminate personal interface and impart transparency (as the preamble to Section 151A declares), then retrospectively reintroducing JAO jurisdiction for the pre-assessment stage — the most discretionary and harassment-prone stage of reassessment — is arbitrary and defeats the Legislature's own stated objective. This would have provided a third, independent constitutional ground.

The Takeaway: What Practitioners Should Do Now

First, this judgment is directly applicable only in Andhra Pradesh. The Punjab & Haryana High Court has reached the same conclusion, but the Supreme Court has stayed that judgment. Expect an SLP against this judgment within days, and expect a similar stay. Do not advise clients to ignore JAO notices on the strength of this judgment alone.

Second, preserve the challenge. Any assessee who has received a Section 148 notice from a JAO (as opposed to the NFAC) for assessment years 2021-22 onwards should file a writ petition challenging jurisdiction, citing this judgment and the unamended 2022 Scheme. Even if the Supreme Court ultimately upholds Section 147A, the repeal argument and the scheme-override argument will need to be addressed on merits.

Third, watch the repeal argument closely. If the Supreme Court accepts that the Finance Act, 2026 could not amend the repealed 1961 Act, the consequences extend far beyond Section 147A. Every retrospective amendment to the 1961 Act made after 01.04.2026 would be vulnerable. This is a nuclear option, and the Court should be careful about deploying it.

Fourth, the broader trend is unmistakable. This is the latest chapter in the ongoing institutional conflict between the Revenue's administrative convenience and the Judiciary's insistence on procedural discipline. The faceless assessment scheme was Parliament's own creation. The Revenue cannot invoke it when convenient and discard it when it becomes an obstacle. Courts across the country are sending the same message: follow your own rules. The AP High Court has now added its voice to that chorus, in a judgment that is analytically rigorous, constitutionally grounded, and — on the separation of powers point — entirely correct.

Whether it survives the Supreme Court is another matter. But even if reversed on the repeal technicality, the separation of powers analysis will endure as a significant contribution to the validating legislation jurisprudence in India.