The Andhra Pradesh High Court Strikes Down Section 147A: A Masterclass in Legislative Overreach — and a Warning for Parliament

The Hook: When Parliament Tries to Sit in Appeal Over the Judiciary

Every few years, the Indian Legislature attempts something constitutionally audacious — it loses a case in court, goes back to the drafting table, and passes a retrospective amendment designed to erase that loss from the legal record. The Andhra Pradesh High Court's judgment in Bala Sreenivas Rao Somisetty vs The Income Tax Officer (WP No. 28520 of 2023 and batch, decided 12.10.2026) is the latest — and one of the most forceful — judicial pushbacks against this habit. A Division Bench of Justices Ninala Jayasurya and T.C.D. Sekhar struck down Section 147A of the Income Tax Act, 1961 as unconstitutional, holding that Parliament cannot amend a statute to nullify judicial decisions without removing the very basis on which those decisions rested. This is not merely a tax case. It is a separation-of-powers case dressed in fiscal clothing, and it deserves every practitioner's attention.

The Facts: A Familiar Story of Jurisdictional Turf Wars

The facts are straightforward, even if the statutory web is dense. Under Section 151A of the Income Tax Act, 1961 — introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 — the Central Government was empowered to frame a scheme for faceless reassessment. Pursuant to this, the CBDT notified the e-Assessment of Income Escaping Assessment Scheme, 2022 on 29.03.2022. The scheme expressly included the issuance of notice under Section 148 within its faceless framework. Despite this, Jurisdictional Assessing Officers (JAOs) across the country continued issuing Section 148A and Section 148 notices, bypassing the faceless mechanism entirely.

The petitioners — over a hundred of them, in a batch spanning multiple assessment years — challenged these notices. A co-ordinate bench of the Andhra Pradesh High Court, by order dated 28.10.2025, quashed the notices, holding that JAOs lacked jurisdiction post-Section 151A. The Revenue filed SLPs. While those were pending, Parliament enacted the Finance Act, 2026, inserting Section 147A with retrospective effect from 01.04.2021. The provision declared, via a non-obstante clause, 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, remitting the matters to the High Courts for fresh consideration of the amendment's validity.

The Arguments: Two Irreconcilable Visions of Legislative Power

The petitioners' case was multi-layered but centred on a single constitutional proposition: Parliament cannot nullify a judicial decision without removing its legal foundation. They argued that Section 147A was not genuinely clarificatory — it was a targeted legislative strike against adverse High Court rulings. Critically, they pointed out that the scheme under Section 151A — which mandated faceless issuance of Section 148 notices — remained unamended. The Legislature was attempting to override the scheme's effect without actually changing it. They also raised a technical but potent argument: the Income Tax Act, 1961 was repealed effective 01.04.2026 when the Income Tax Act, 2025 came into force. Section 147A, inserted via the Finance Act, 2026 (which itself came into force on 01.04.2026), was therefore an amendment to a dead statute.

The Revenue, represented by the Additional Solicitor General, invoked the well-worn doctrine of validating legislation. It argued that Parliament possesses plenary power to validate laws retrospectively, citing the twin test from Shri Prithvi Cotton Mills Ltd. vs Broach Borough Municipality, (1969) 2 SCC 283: remove the defect identified by the court, and do so through retrospective enactment. The Revenue contended that divergent High Court views had created administrative chaos — over 8.82 lakh reassessment notices, ₹21.74 lakh crore in assessed income — and that Section 147A merely clarified what Parliament always intended: that JAOs handle the pre-assessment stage while NFAC handles the assessment itself.

The Judgment: A Bench That Refused to Blink

Justice T.C.D. Sekhar, writing for the Bench, rejected the Revenue's validation argument with surgical precision. The Court's reasoning proceeded on three principal grounds.

First, on the validation doctrine itself: the Court held that while Parliament can retrospectively validate a law, it must remove the actual defect identified by the judiciary. Here, the defect was not ambiguity in the statute — it was the JAO's lack of jurisdiction under the existing scheme. Since the scheme under Section 151A remained unamended and still included Section 148 within the faceless framework, the basis of the High Courts' earlier rulings was untouched. The Court relied on State of Tamil Nadu vs M. Rayappaiah Gounder, (1971) 3 SCC 1, to reinforce that the Legislature cannot simply direct instrumentalities to disregard judicial decisions.

Second, on the separation of powers: the Court found that Section 147A was a legislative attempt to "over reach the judgments rendered by various High Courts, in direct conflict with the Doctrine of separation of powers, which is the basic structure of the Constitution." This is strong language, and the Bench meant it.

Third, and perhaps most devastatingly, on the repeal argument: the Court held that the Income Tax Act, 1961 stood repealed at midnight on 31.03.2026. The Finance Act, 2026, by its own Section 2(a), came into force only on 01.04.2026. Relying on Common Cause vs 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 cannot be invoked to argue it came into force earlier. Therefore, Section 147A was an amendment to a repealed statute — a legal nullity from inception.

The Critique: Largely Sound, But Not Without Vulnerabilities

Let me be direct: this is a well-reasoned judgment, and I agree with its core holding. The Bench correctly identified that the Revenue was attempting what I would call a legislative shortcut — changing the label without changing the substance. You cannot insert a non-obstante clause declaring JAOs competent while leaving intact a scheme that says the opposite. That is not clarification; it is contradiction.

The Court's application of the Prithvi Cotton Mills twin test is rigorous. The Revenue argued it had satisfied both prongs, but the Bench correctly observed that the first prong — removing the defect — was never actually met. The defect was the scheme's inclusion of Section 148 within the faceless framework. Without amending that scheme, the insertion of Section 147A was constitutionally hollow.

However, I have reservations about the repeal argument. The Court's conclusion that Section 147A is invalid because it amends a repealed statute is technically elegant but practically fragile. Section 536(2)(c) of the Income Tax Act, 2025 explicitly provides that the repealed Act's provisions continue to apply to pending and future proceedings relating to pre-2026 tax years. The Revenue has a colourable argument that Parliament, having preserved the old Act's operation for these purposes, retained the competence to amend it for those same purposes. The Bench acknowledged this provision but did not engage with it as deeply as the point deserved. This is where the Supreme Court, if and when it hears the Revenue's appeal, is most likely to push back.

I also note that the Punjab and Haryana High Court reached the same conclusion on 10.09.2026, and the Supreme Court stayed that judgment on 18.09.2026. The Andhra Pradesh Bench was aware of this stay but proceeded to decide independently — which is its prerogative, but it does create an uncomfortable situation where two High Courts have struck down a central statute while the Supreme Court has signalled it wants to examine the question.

The Takeaway: What This Means for Your Practice

For tax practitioners: If your client received a Section 148 or 148A notice from a JAO (not through the faceless mechanism) after 29.03.2022, this judgment is directly relevant. The notices are void ab initio in the Andhra Pradesh High Court's jurisdiction. File or amend writ petitions accordingly. But be prepared for the Revenue to seek a stay from the Supreme Court — the Punjab and Haryana precedent suggests they will.

For constitutional lawyers: This judgment is a significant addition to the jurisprudence on validating legislation. The Court's insistence that the scheme — not just the parent statute — must be amended before a validating provision can survive scrutiny is a refinement that will be cited in future challenges to retrospective amendments. The judgment effectively tells Parliament: you cannot amend the statute and leave the subordinate legislation untouched when the subordinate legislation is the actual basis of the judicial decision you are trying to overcome.

For everyone: Watch the Supreme Court. The stay on the Punjab and Haryana judgment indicates the Court is taking this seriously. The question of whether Parliament can use a non-obstante clause to override a scheme framed under its own delegated legislation — without amending that scheme — is a genuinely novel constitutional question. The answer will shape the boundaries of legislative power for years to come.

The Andhra Pradesh High Court has drawn a line. Whether it holds will depend on the Supreme Court's appetite for reinforcing — or relaxing — the separation of powers in an era of increasingly aggressive legislative drafting.