Parliament Cannot Override Judicial Verdicts Through a ‘Clarification’: Punjab and Haryana High Court Strikes Down Section 147A, Quashes Reassessment Notices Issued by Jurisdictional AOs
Case Name: Jyoti Sareen v. Union of India and Others, along with connected writ petitions.
Date of Judgment: 10 September 2026
Citation: CWP No. 15791 of 2024
Bench: Hon’ble Mr. Justice Deepak Sibal and Hon’ble Ms. Justice Rupinderjit Chahal
Held: The Punjab and Haryana High Court declared Section 147A of the Income-tax Act, 1961 unconstitutional, holding that Parliament cannot nullify binding judicial pronouncements merely by introducing a retrospective “clarification” without removing the legal defect on which those judgments were founded. The Court found that Section 147A sought to validate reassessment notices issued by jurisdictional Assessing Officers despite the continuing mandate of Section 151A and the e-Assessment of Income Escaping Assessment Scheme, 2022, which require notices under Section 148 to be issued through randomized automated allocation and in a faceless manner. Since neither Section 151A nor the Scheme dated 29 March 2022 was amended, the foundation of the earlier judicial decisions remained intact. Section 147A, therefore, amounted to an impermissible legislative attempt to circumvent unfavourable judgments and encroached upon the judicial power, contrary to the rule of law, separation of powers and Article 14 of the Constitution.
Summary: The batch of writ petitions arose from reassessment notices issued under Section 148 of the Income-tax Act by the petitioners’ respective jurisdictional Assessing Officers. In the lead matter, the petitioner, an advocate and income-tax assessee, was issued a notice dated 15 March 2024 seeking reassessment for Assessment Year 2020-21. The notice was challenged on the ground that it had been issued by the jurisdictional Assessing Officer, whereas Section 151A of the Act, read with the e-Assessment of Income Escaping Assessment Scheme, 2022, required such notices to be issued through automated allocation and in a faceless manner.
The High Court had earlier allowed the petition and quashed the notice. While the Revenue’s appeal was pending before the Supreme Court, Parliament enacted Section 147A retrospectively with effect from 1 April 2021. The provision declared that, notwithstanding any judgment, Section 151A or any scheme framed under it, the “Assessing Officer” for Sections 148 and 148A meant, and had always meant, an officer other than the National Faceless Assessment Centre or an assessment unit under Section 144B. Following this amendment, the Supreme Court remitted the matters to the jurisdictional High Courts while expressly leaving the constitutional validity, scope, effect and retrospectivity of Section 147A open for adjudication.
Examining the law governing validating legislation, the High Court held that the legislature may retrospectively amend a statute and neutralize the effect of a judgment, but only by curing the defect identified by the court and fundamentally altering the legal basis upon which the earlier decision rested. It cannot directly declare a judicial interpretation ineffective or substitute its own declaration for the law pronounced by constitutional courts.
The Court found that several High Courts had held that Section 151A and Clause 3(b) of the 2022 Scheme permitted Section 148 notices to be issued only by faceless Assessing Officers selected through randomized automated allocation. However, Section 147A neither amended Section 151A nor altered the Scheme. It was also silent regarding the automated and randomized allocation requirement. Consequently, the defects identified in the earlier judgments remained uncured.
The Bench observed that the non-obstante clause in Section 147A could not, by itself, rescue the provision. The legislature had effectively sought to declare that the earlier judicial interpretation was incorrect without changing the statutory foundation supporting that interpretation. Such an exercise amounted to legislative overruling, impermissibly trenched upon judicial power and violated the constitutional doctrine of separation of powers.
Independently of the constitutional invalidity of Section 147A, the Court held that Clause 3(b) of the e-Assessment of Income Escaping Assessment Scheme, 2022 expressly applies to the issuance of notices under Section 148. A harmonious reading of Sections 151A and 144B with the Scheme makes randomized automated allocation and faceless issuance mandatory. Once the law prescribes a particular procedure, the Revenue cannot issue reassessment notices through any other mode. Notifications or internal instructions issued under Section 120 could not override the statutory Scheme approved by Parliament.
Decision: The High Court allowed the writ petitions, declared Section 147A of the Income-tax Act, 1961 unconstitutional and directed that it be struck down. It also set aside the reassessment notices issued under Section 148 by the petitioners’ jurisdictional Assessing Officers because they had not been issued through randomized automated allocation and in a faceless manner, as mandated by Section 151A and the e-Assessment of Income Escaping Assessment Scheme, 2022.