Andhra Pradesh High Court Strikes Down Section 147A — A Sharp Rebuke to Legislative Overreach, But Questions Remain

The Hook: When Parliament Tries to Turn Back Time

The Andhra Pradesh High Court's decision in Bala Sreenivas Rao Somisetty v. Income Tax Officer is not just another tax writ. It is a constitutional confrontation between the judiciary and the legislature over a deceptively simple question: can Parliament nullify judicial decisions by retroactively rewriting the law without fixing the underlying defect? The Division Bench of Justices Ninala Jayasurya and T.C.D. Sekhar has answered with a resounding "no," striking down Section 147A of the Income Tax Act, 1961 as unconstitutional. This judgment matters because it goes to the heart of the separation of powers doctrine and sets limits on the legislature's ability to weaponise retrospective amendments to defeat judicial review. With over 170 writ petitions disposed of in a single order, this is a mass repudiation of the Revenue's attempt to validate thousands of reassessment notices issued by Jurisdictional Assessing Officers (JAOs) in defiance of the faceless assessment scheme.

The Facts: A Battle Over Who Wields the Power to Reassess

The genesis of this dispute lies in the e-Assessment of Income Escaping Assessment Scheme, 2022, notified under Section 151A of the Income Tax Act, 1961. The scheme, effective from 29.03.2022, mandated that reassessment proceedings under Sections 147 and 148 be conducted in a faceless manner through automated allocation. The legislative intent was clear: eliminate personal interface between tax authorities and assessees, thereby enhancing transparency and accountability.

Despite this, JAOs across the country continued issuing notices under Sections 148A and 148, bypassing the faceless mechanism. The petitioners challenged these notices, arguing that the JAOs lacked jurisdiction. A coordinate bench of the Andhra Pradesh High Court agreed, quashing the notices on 28.10.2025. The Revenue appealed to the Supreme Court, but while the SLPs were pending, Parliament inserted Section 147A through the Finance Act, 2026, 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 National Faceless Assessment Centre (NFAC) or any assessment unit.

The Supreme Court, in its order dated 10.04.2026, set aside the High Court's earlier judgment and remanded the matter, granting liberty to the petitioners to challenge the constitutional validity of Section 147A. The petitioners amended their writ petitions accordingly, and the matter was heard afresh.

The Arguments: A Clash of Constitutional Principles

The petitioners mounted a multi-pronged attack. Their primary contention was that Section 147A was a legislative overreach designed to nullify judicial decisions without removing their basis. They argued that the scheme under Section 151A remained unamended, and therefore, the defect identified by the courts — the lack of jurisdiction of JAOs — persisted. They also invoked the doctrine of separation of powers, contending that Parliament cannot sit in appeal over judicial decisions. Additionally, they raised a novel argument: the Income Tax Act, 1961 was repealed on 31.03.2026 and replaced by the Income Tax Act, 2025, making any amendment to the repealed Act legally untenable.

The Revenue, represented by the Additional Solicitor General, defended Section 147A as a valid exercise of legislative competence. It argued that the amendment was clarificatory in nature, intended to remove doubts about the jurisdiction of JAOs. The Revenue relied on the twin test for validating statutes: (1) the legislature must remove the defect identified by the court, and (2) the validation must be done retrospectively. It also submitted statistical data showing that reassessment proceedings had been initiated against over 8.8 lakh assessees, with ₹21.74 lakh crores at stake, warning of dire consequences if the notices were quashed.

The Judgment: A Strong Defence of Judicial Supremacy

The Court systematically dismantled the Revenue's arguments. It held that Section 147A failed the twin test for validating statutes because it did not remove the basis of the earlier judicial decisions. The defect identified by the courts was the lack of jurisdiction of JAOs under the faceless scheme. Section 147A did not amend the scheme or Section 151A; it merely declared that JAOs had always been the competent authority. This, the Court held, was an impermissible attempt to nullify judicial decisions without addressing the underlying legal framework.

The Court also rejected the Revenue's argument that Section 147A was merely clarificatory. It noted that the non-obstante clause in Section 147A explicitly overrode Section 151A and the scheme, demonstrating that the amendment was substantive, not clarificatory. The Court observed:

"By introducing Section 147A, 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, which is the basic structure of the Constitution."

On the repeal argument, the Court held that the Income Tax Act, 1961 was repealed at midnight on 31.03.2026, and the Finance Act, 2026, which inserted Section 147A, 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 v. Union of India (2003) 8 SCC 250, the Court concluded that an amendment to a repealed Act has no legal sanctity.

Finally, the Court dismissed the Revenue's public interest argument, holding that the mere fact that many assessees did not challenge the proceedings could not validate an illegal exercise of jurisdiction.

The Critique: A Bold Judgment, But Is It Bulletproof?

This judgment is a robust defence of judicial review and the separation of powers. The Court's refusal to allow the legislature to nullify judicial decisions without removing their basis is constitutionally sound and consistent with the Supreme Court's jurisprudence in 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.

However, the judgment is not without vulnerabilities. The Court's reliance on the repeal of the Income Tax Act, 1961, while technically correct, may be seen as a narrow ground that could be easily addressed by Parliament through a fresh amendment to the Income Tax Act, 2025. The stronger and more durable ground is the failure of Section 147A to remove the basis of the judicial decisions. This ground strikes at the heart of legislative competence and is less susceptible to legislative correction.

The Court could have also engaged more deeply with the Revenue's argument that Section 147A was intended to provide certainty and avoid litigation. While this is a legitimate legislative objective, it cannot justify overriding judicial decisions without addressing the underlying legal framework. The Court's dismissal of this argument is correct but could have been more fully reasoned.

Another point of concern is the Court's treatment of the Revenue's statistical data. While the Court was right to hold that the volume of reassessment proceedings cannot validate an illegal exercise of jurisdiction, it could have acknowledged the practical challenges faced by the Revenue and suggested a more collaborative approach to resolving the issue.

The Takeaway: What Practitioners Should Learn

This judgment is a reminder that the judiciary will not hesitate to strike down legislative attempts to nullify judicial decisions without removing their basis. Practitioners should carefully scrutinise any retrospective amendment that purports to validate actions previously declared illegal. The key question is whether the amendment addresses the underlying defect or merely seeks to override the judicial decision.

For tax practitioners, this judgment underscores the importance of the faceless assessment scheme and the limits on the jurisdiction of JAOs. Any reassessment notice issued by a JAO in defiance of the scheme is vulnerable to challenge. Practitioners should also be aware of the potential for further legislative action and monitor developments closely.

Finally, this judgment highlights the importance of the separation of powers doctrine in Indian constitutional law. The judiciary's role as the final arbiter of legal disputes cannot be usurped by the legislature. This is a principle worth defending, even in the face of practical challenges and public interest arguments.