Andhra Pradesh HC Strikes Down Section 147A: Parliament Cannot Amend a Dead Statute to Override Judicial Authority

When the Legislature Tries to Resurrect the Dead: A Constitutional Farce

The Andhra Pradesh High Court's decision in Bala Sreenivas Rao Somisetty vs Income Tax Officer (2026) is not merely a tax judgment—it is a constitutional moment. By striking down Section 147A of the Income Tax Act, 1961, introduced retrospectively through the Finance Act, 2026, Justices Ninala Jayasurya and T.C.D. Sekhar have drawn a bright red line: Parliament cannot amend a repealed statute, nor can it nullify judicial decisions without removing their legal foundation. This is a judgment that will reverberate through tax litigation, constitutional law, and the doctrine of separation of powers for years to come.

The case is emblematic of a deeper malaise in Indian fiscal governance—the tendency of the executive to treat judicial decisions as inconvenient obstacles to be legislated away rather than as authoritative interpretations of law to be respected. What makes this judgment particularly significant is the Court's refusal to be swayed by the Revenue's "public interest" argument involving Rs. 21.74 lakh crores in reassessed income. Constitutional principles, the Court reminds us, are not subject to cost-benefit analysis.

The Facts: A Procedural Battle with Constitutional Stakes

The controversy arises from the introduction of the Faceless Assessment Scheme, first as a policy in 2019, then codified through Section 144B by the Finance Act, 2021, and extended to reassessment proceedings through Section 151A. The e-Assessment of Income Escaping Assessment Scheme, 2022, notified on 29.03.2022, mandated that proceedings under Sections 147 and 148 be conducted through automated allocation in a faceless manner.

Despite this statutory scheme, Jurisdictional Assessing Officers (JAOs) across the country continued issuing notices under Sections 148A and 148, bypassing the National Faceless Assessment Centre (NFAC). Multiple writ petitions were filed challenging this jurisdictional overreach. On 28.10.2025, a coordinate bench of the Andhra Pradesh High Court allowed these petitions, holding that JAOs lacked jurisdiction post the 2022 notification.

The Revenue approached the Supreme Court. While the SLPs were pending, Parliament enacted the Finance Act, 2026, introducing Section 147A with retrospective effect from 01.04.2021. This provision declared 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 assessment unit. The Supreme Court then remitted the matters back to the High Courts, granting liberty to challenge the constitutional validity of Section 147A itself.

The Arguments: Separation of Powers vs. Legislative Competence

The petitioners mounted a multi-pronged attack. First, they argued that Section 147A was not clarificatory but a blatant attempt to nullify judicial decisions—an impermissible encroachment on judicial power violating the basic structure doctrine. Second, they contended that the amendment failed the twin test for validating legislation laid down in Shri Prithvi Cotton Mills Ltd. vs Boroach Borough Municipality, (1969) 2 SCC 283: it neither removed the defect identified by courts nor amended the underlying scheme. Third, and most ingeniously, they argued that the Income Tax Act, 1961, stood repealed on 31.03.2026 when the Income Tax Act, 2025, came into force on 01.04.2026. Therefore, the Finance Act, 2026—which itself came into force on 01.04.2026—could not amend a statute that had ceased to exist.

The Revenue, represented by the Additional Solicitor General, relied on the presumption of constitutionality attached to fiscal legislation. It argued that Section 147A was a legitimate validation exercise, removing ambiguity about jurisdictional competence. The Revenue emphasized the two-stage reassessment process: pre-assessment inquiry under Section 148A by the JAO, followed by faceless assessment under Section 147. It also pointed to the massive revenue at stake—Rs. 21.74 lakh crores—and the fact that 6,46,897 assessees had already been reassessed without challenging jurisdiction.

The Judgment: A Masterclass in Constitutional Reasoning

The Division Bench systematically dismantled each of the Revenue's contentions. On the jurisdictional question, the Court held that Section 151A and the 2022 Scheme unambiguously required faceless issuance of notices under Section 148. The Revenue's argument that only the assessment stage (Section 147) was faceless while the notice stage (Section 148) remained with JAOs was rejected as "blowing hot and cold." The Court noted that if the Revenue's interpretation were correct, there would need to be a formal transfer order under Section 127 from JAO to NFAC—something conspicuously absent.

On the validation doctrine, the Court applied the twin test from Prithvi Cotton Mills and State of Tamil Nadu vs M. Rayappaiah Gounder, (1971) 3 SCC 1. While acknowledging Parliament's plenary power to legislate retrospectively, the Court emphasized that such power is "subject to certain limitations, viz., while validating the law it shall remove the defect which the Courts had found in the existing law." Critically, the earlier judgments had not identified any "defect" in the statute or scheme—they had simply held that JAOs lacked jurisdiction under the existing law. Section 147A did not amend Section 151A or the 2022 Scheme; it merely inserted a non-obstante clause overriding judicial interpretations. This, the Court held, was legislative overreach violating separation of powers.

But the most devastating blow came on the repeal question. The Court meticulously traced the legislative timeline: the Income Tax Act, 1961, was repealed at midnight on 31.03.2026; the Income Tax Act, 2025, came into force on 01.04.2026; and the Finance Act, 2026, by its own Section 2(a), also came into force on 01.04.2026. Relying on Section 5 of the General Clauses Act and the Supreme Court's decision in Common Cause vs Union of India, (2003) 8 SCC 250, the Court held that when an Act expressly provides for its commencement date, that date controls—not the date of Presidential assent. Since the Finance Act, 2026, came into force only on 01.04.2026, it could not amend the Income Tax Act, 1961, which had ceased to exist at the stroke of midnight on 31.03.2026.

"Any amendment/insertion made to the Repealed Act is not sustainable under law and it has no legal sanctity, accordingly the same is liable to be struck down from the date of its inception or nativity."

The Court also rejected the Revenue's reliance on Section 536(2)(c) of the 2025 Act, which saves pending proceedings under the repealed Act. While this provision allows proceedings to continue under the old Act's procedure, it does not empower Parliament to substantively amend the repealed Act. The savings clause preserves the status quo; it does not resurrect the repealed statute for future amendments.

The Critique: Courageous, But Is It Complete?

This is a courageous and largely well-reasoned judgment. The Court's refusal to be intimidated by the Revenue's "floodgates" and "public interest" arguments is commendable. The meticulous analysis of the repeal issue demonstrates judicial craftsmanship of a high order. However, certain aspects deserve closer scrutiny.

First, the Court's treatment of the validation doctrine, while doctrinally sound, could have engaged more deeply with the Supreme Court's evolving jurisprudence on legislative overruling. In Indian Aluminium Co. vs State of Kerala, (1996) 7 SCC 637, the Supreme Court held that the legislature can remove the basis of a judicial decision by altering the legal landscape, even retrospectively. The line between permissible "removal of basis" and impermissible "nullification" is notoriously thin. The Andhra Pradesh High Court could have provided more guidance on when legislative clarification crosses into judicial encroachment.

Second, the Court's reliance on the repeal argument, while ingenious, raises questions about legislative drafting competence. If Parliament intended Section 147A to operate retrospectively from 01.04.2021, and if the Finance Act, 2026, received Presidential assent on 30.03.2026 (one day before the repeal), could Parliament not have simply provided for immediate commencement? The Court's formalistic interpretation is defensible, but it exposes a troubling reality: constitutional validity now turns on legislative drafting precision rather than substantive constitutional limits.

Third, the judgment leaves unresolved the fate of the 6,46,897 assessees who were reassessed without challenging jurisdiction. While the Court correctly held that acquiescence cannot validate jurisdictional overreach, the practical consequences are staggering. Are all these reassessments void? Can they be challenged collaterally? The Court's silence on transitional justice is understandable but problematic.

That said, these are minor quibbles. The core holding—that Parliament cannot amend a repealed statute—is constitutionally unassailable. The judgment correctly identifies that Section 147A was not a genuine clarification but a legislative sleight of hand designed to reverse judicial losses without engaging with their reasoning.

The Takeaway: What Practitioners Must Know

For tax practitioners, this judgment is a goldmine. Any reassessment proceedings initiated by JAOs after 29.03.2022 (when the 2022 Scheme came into force) are vulnerable to challenge on jurisdictional grounds. The faceless mandate is not directory; it is a condition precedent to valid exercise of power under Sections 148 and 148A.

For constitutional lawyers, the judgment reinforces three critical principles: (1) retrospective validation must remove the judicially identified defect, not merely override the judgment; (2) separation of powers prohibits the legislature from sitting in appeal over judicial decisions; and (3) a repealed statute cannot be amended, even if the amending Act is assented to before the repeal takes effect but comes into force after.

More broadly, this judgment is a warning shot across the government's bow. In recent years, we have seen increasing legislative attempts to nullify inconvenient judicial decisions through retrospective amendments—the Vodafone tax amendment being the most notorious example. The Andhra Pradesh High Court has signaled that constitutional courts will scrutinize such attempts rigorously, particularly when they undermine the rule of law and judicial finality.

The Revenue will undoubtedly appeal. The Supreme Court's earlier remand order suggests it is alive to the complexities. But for now, the Andhra Pradesh High Court has delivered a judgment that will be cited for decades as a bulwark against legislative overreach. In an era when institutional checks and balances are under strain, that is no small achievement.