The Andhra Pradesh High Court Just Told Parliament It Cannot Rewrite a Repealed Law — And It's About Time

The Hook: When Legislative Overreach Meets Its Match

In a judgment that should be required reading for every tax practitioner and constitutional law student in this country, the Andhra Pradesh High Court has done something increasingly rare in Indian fiscal jurisprudence: it has told Parliament, in unambiguous terms, that there are limits to retrospective legislation. Bala Sreenivas Rao Somisetty v. Income Tax Officer (WP No.28520 of 2023 and batch, decided on 12.10.2026) is not merely a tax case. It is a constitutional boundary-marking exercise that strikes at the heart of a deeply troubling pattern in Indian legislative practice — the habit of using retrospective amendments as a wrecking ball against inconvenient judicial decisions.

The Division Bench of Justice Ninala Jayasurya and Justice T.C.D. Sekhar struck down Section 147A of the Income Tax Act, 1961 as unconstitutional, and in doing so, invalidated hundreds of reassessment proceedings initiated by Jurisdictional Assessing Officers across Andhra Pradesh. The judgment is significant not just for what it holds, but for what it refuses to tolerate: a Parliament that believes it can amend a repealed statute, override judicial decisions without removing their basis, and dress up legislative overruling as "clarification."

The Facts: A Scheme Ignored, a Judgment Nullified, a Repealed Act Amended

The factual matrix, stripped to its essentials, is straightforward. The Income Tax Act, 1961 was amended over the years to introduce faceless assessment mechanisms. Section 151A, introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, empowered the Central Government to frame schemes for faceless reassessment. Pursuant to this, the CBDT issued Notification No.18/2022 dated 29.03.2022, establishing the "e-Assessment of Income Escaping Assessment Scheme, 2022." The scheme explicitly included the issuance of notice under Section 148 within its scope, requiring it to be done through automated allocation in a faceless manner.

Despite this, Jurisdictional Assessing Officers (JAOs) across the country continued issuing notices under Sections 148A and 148 in the traditional, non-faceless manner. Multiple High Courts, including a co-ordinate bench of the Andhra Pradesh High Court (by order dated 28.10.2025), held that JAOs lacked jurisdiction to issue such notices once the faceless scheme was in force. The Revenue appealed to the Supreme Court.

While the SLPs were pending, Parliament enacted the Finance Act, 2026 (Act No.4 of 2026), inserting Section 147A into the Income Tax Act, 1961 with retrospective effect from 01.04.2021. This provision declared, notwithstanding any judgment or the scheme under Section 151A, that the "Assessing Officer" for Sections 148 and 148A would mean an officer other than the NFAC or any assessment unit. The Supreme Court then remitted the matters back to the High Courts, leaving the constitutional validity of Section 147A open for challenge.

Here is the critical factual wrinkle that the petitioners seized upon and the Court found decisive: the Income Tax Act, 1961 was repealed on 31.03.2026, and the Income Tax Act, 2025 came into force from 01.04.2026. The Finance Act, 2026, which inserted Section 147A, itself stated it would come into force from 01.04.2026 — the very day the old Act ceased to exist.

The Arguments: A Familiar Battle Over Legislative Competence

The petitioners, represented by a veritable army of counsel led by Sri A.V.A. Siva Kartikeya and others, mounted a multi-pronged attack. Their core arguments were: first, that Section 147A was not clarificatory but a thinly veiled attempt to nullify judicial decisions without removing their basis — a classic case of legislative overruling that violates separation of powers. Second, that the scheme under Section 151A remained unamended, meaning the statutory basis for the High Court decisions (that Section 148 was included in the faceless scheme) was never addressed. Third, and most fatally, that Parliament cannot amend a repealed statute — the Income Tax Act, 1961 ceased to exist at midnight on 31.03.2026, and the Finance Act, 2026 by its own terms came into force only on 01.04.2026.

The Revenue, represented by Additional Solicitor General Sri N. Venkataraman, relied on the well-worn doctrine of validating legislation. The argument was that Parliament has plenary power to legislate retrospectively, that Section 147A satisfied the "twin test" for validating acts (removing the defect and doing so retrospectively), and that the amendment merely clarified the legislative intent that JAOs were always meant to handle pre-assessment proceedings under Sections 148A and 148. The Revenue also pointed to practical considerations — over 8.82 lakh reassessment notices issued nationwide, Rs.21.74 lakh crores in assessed income — arguing that striking down Section 147A would have catastrophic consequences for public revenue.

The Judgment: A Methodical Dismantling of Legislative Overreach

The Court's reasoning proceeds on two independent tracks, each sufficient to invalidate Section 147A.

First, on the merits of the validating legislation argument, the Court held that the twin test for validating acts — as laid down in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, (1969) 2 SCC 283 — requires the legislature to remove the defect identified by the courts. Here, the defect identified by multiple High Courts was that Section 148 was included in the faceless scheme under Section 151A, and therefore JAOs had no jurisdiction. Section 147A did not amend Section 151A or the scheme. It simply declared, via a non-obstante clause, that the Assessing Officer would be someone other than the NFAC. The Court found this constitutionally impermissible:

"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, which is the basic structure of the Constitution."

This is the crux of the matter. The Court drew a clear line between permissible validation (removing the basis of a judicial decision by altering the underlying legal framework) and impermissible overruling (simply declaring the judicial decision wrong without changing the legal landscape that produced it). Parliament did the latter, and the Court called it out.

Second, on the repealed Act argument, the Court's reasoning is devastatingly simple and, frankly, difficult to refute. 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. Therefore, when Section 147A was "inserted" into the Income Tax Act, 1961, that Act no longer existed. The Court relied on Common Cause v. Union of India, (2003) 8 SCC 250, to hold that where an Act expressly provides for its commencement date, Section 5 of the General Clauses Act (which provides for commencement on the date of Presidential assent) has no application. The Finance Act, 2026 expressly stated it would come into force on 01.04.2026, and therefore it did not come into force on 30.03.2026 (the date of Presidential assent), when the old Act was still alive.

The Court concluded:

"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 Critique: A Strong Judgment, But Not Without Vulnerabilities

Let me be direct: I agree with the outcome. The practice of using retrospective "clarificatory" amendments to nullify judicial decisions has become a chronic disease in Indian tax legislation, and it needed judicial pushback. The Court's analysis of the validating legislation doctrine is sound and well-supported by precedent. Where I think the judgment is particularly effective is in its refusal to be swayed by the Revenue's "floodgates" and "public interest" arguments. The Court correctly held that administrative convenience and revenue collection cannot justify unconstitutional legislative action.

However, I have reservations about the second ground — the repealed Act argument. While technically elegant, it feels like a trapdoor rather than a principled constitutional holding. The Revenue's counter-argument, though rejected, was not frivolous: the Finance Act, 2026 received Presidential assent on 30.03.2026, when the Income Tax Act, 1961 was still in force. The question of when an amending Act "acts upon" the principal Act — at the date of assent or the date of commencement — is not as settled as the Court suggests. The Common Cause precedent dealt with a situation where the legislature delegated the commencement date to the executive; here, the legislature itself fixed the date. The distinction is real but narrow, and I would not be surprised if the Supreme Court takes a different view on this point.

Moreover, the Court could have strengthened its analysis by engaging more deeply with the separation of powers doctrine. The judgment cites State of Tamil Nadu v. M. Rayappaiah Gounder, (1971) 3 SCC 1, for the proposition that the legislature cannot direct instrumentalities to disobey court decisions, but it does not fully develop the argument that Section 147A, by using a non-obstante clause to override judicial decisions without altering the underlying scheme, effectively amounts to the legislature sitting in appeal over the judiciary. A more robust engagement with Minerva Mills Ltd. v. Union of India, (1980) 3 SCC 625, and I.R. Coelho v. State of Tamil Nadu, (2007) 2 SCC 1, would have added doctrinal heft.

There is also a curious omission. The petitioners argued that Section 147A violated Articles 14, 19(1)(g), and 265 of the Constitution. The Court did not independently address these arguments, resting its decision entirely on legislative competence and separation of powers. While this is understandable — if a provision is beyond legislative competence, substantive constitutional challenges become academic — a brief discussion of the Article 14 arbitrariness argument would have been valuable, particularly given the retrospective deprivation of the petitioners' right to faceless assessment.

Finally, the Court's treatment of the Revenue's "two-stage" argument (that Sections 148A/148 constitute a pre-assessment stage handled by JAOs, while Section 147 assessment is faceless) is thorough but could have been more concise. The key point — that the scheme explicitly includes Section 148 and the Revenue cannot explain why — is made effectively, but it is buried under considerable repetition.

The Takeaway: What Practitioners Should Learn

First, this judgment is a powerful reminder that the validating legislation doctrine has teeth. Parliament cannot simply wave a legislative wand and declare judicial decisions wrong. It must engage with the reasoning of the courts and alter the legal framework that produced those decisions. If your client faces a retrospective amendment that purports to "clarify" the law after an adverse judicial ruling, scrutinize whether the underlying statutory scheme has actually been amended. If it hasn't, you have a strong constitutional challenge.

Second, the repealed Act argument opens a new frontier in challenging retrospective tax amendments. With the Income Tax Act, 2025 now in force and the 1961 Act repealed, any amendment to the old Act must be carefully examined for temporal competence. Practitioners should pay close attention to commencement provisions, repeal and savings clauses, and the interplay between the General Clauses Act and specific commencement dates.

Third, for reassessment proceedings specifically, this judgment reinforces that the faceless scheme under Section 151A is not optional. If your client received a notice under Section 148 from a JAO (rather than through the NFAC), and the notice was issued after the scheme came into force on 29.03.2022, the notice is vulnerable to challenge on jurisdictional grounds — regardless of Section 147A.

Fourth, expect the Revenue to appeal. The Punjab and Haryana High Court has already struck down Section 147A (judgment dated 10.09.2026), and the Supreme Court stayed that decision on 18.09.2026. The Andhra Pradesh High Court has now added its voice to the chorus. This issue is heading to the Supreme Court, and the stakes — Rs.21.74 lakh crores in assessed income — ensure that the Revenue will fight hard. The final word on Section 147A has not been written.

Finally, a broader observation. This judgment arrives at a moment when the relationship between Parliament and the judiciary in tax matters is increasingly fraught. The pattern of enacting retrospective amendments to override judicial decisions — from Vodafone to the present case — erodes the rule of law and creates perverse incentives for the Revenue to litigate aggressively, secure adverse decisions, and then simply legislate them away. The Andhra Pradesh High Court has drawn a line. Whether the Supreme Court will hold it remains to be seen. But for now, practitioners have a well-reasoned, constitutionally grounded judgment to deploy in reassessment challenges across the country.

The Court's closing words bear repetition: "Such acts of Legislature over reach which unsettle the decisions of Courts and lead to chaos cannot be allowed." One hopes Parliament is listening.