Punjab & Haryana High Court Strikes Down Section 147A; Faceless Section 148 Process Prevails in Jyoti Sareen Batch
The Punjab and Haryana High Court has struck down Section 147A of the Income-tax Act as unconstitutional and set aside reassessment notices issued by jurisdictional Assessing Officers where the notices were not generated through the faceless, randomised allocation mechanism contemplated by Section 151A and the scheme dated March 29, 2022. The judgment was delivered on September 10, 2026 in Jyoti Sareen v. Union of India and others, CWP No. 15791-2024 (O&M), along with connected petitions.
The ruling is a major development for reassessment litigation because Section 147A had been inserted retrospectively from April 1, 2021 through the Finance Act, 2026 in an attempt to address the long-running dispute over whether Section 148 notices could be issued by jurisdictional Assessing Officers or only through the faceless statutory architecture.
Why Section 147A was enacted
The controversy arose after the faceless reassessment framework was introduced. Section 151A empowered the Central Government to frame a scheme for assessment, reassessment and issuance of notices in a faceless manner, including through automated allocation. The scheme dated March 29, 2022 expressly dealt with proceedings under Section 147 and the issuance of notices under Section 148.
Several High Courts had earlier held that Section 148 notices issued by jurisdictional Assessing Officers did not comply with that framework. The Revenue challenged a number of those decisions. During the litigation, Parliament inserted Section 147A retrospectively. The provision sought to state, for the purposes of Sections 148 and 148A, what the expression Assessing Officer meant and to validate the role of jurisdictional officers.
The Supreme Court later remitted affected matters to the High Courts for fresh consideration in light of the new provision while leaving taxpayers free to challenge the constitutional validity of Section 147A. The Punjab and Haryana High Court's September 10 judgment addresses that challenge directly.
High Court says the original defect was not cured
The Division Bench of Justice Deepak Sibal and Justice Rupinderjit Chahal applied the principles governing validating legislation. A legislature can enact a retrospective cure after a court identifies a defect, but the new law must remove the legal foundation of the earlier decision. Merely declaring a different result, without curing the underlying statutory inconsistency, is not enough.
The Court found that Section 151A remained on the statute book and that the March 29, 2022 scheme also continued to operate. Section 147A did not amend Section 151A or rewrite the scheme. In the Court's view, that meant the statutory basis for the earlier faceless-reassessment rulings had not been removed.
The judgment further held that the scheme required Section 148 notices to be issued through randomised automated allocation and in a faceless manner. The Revenue argued that notifications issued under Section 120 preserved jurisdiction for local Assessing Officers and that the faceless scheme did not extend to the relevant pre-assessment steps. The Court rejected those submissions, holding that the statutory provision and the scheme framed under it prevailed over contrary executive notifications.
Section 148 notices in the batch were set aside
In its concluding directions, the Court held Section 147A unconstitutional and directed that it be struck down. It also set aside the Section 148 notices challenged by the petitioners because the notices had not been issued through random allocation of Assessing Officers and through the faceless process mandated by Section 151A read with the March 29, 2022 scheme.
The full judgment records that the petitions were allowed in those terms on September 10, 2026. The case carries the neutral citation shown on the judgment as 2026:PHHC:128067-DB. Current legal reporting identifies the lead matter as Jyoti Sareen and notes that the ruling applies to the connected batch before the Court.
What tax professionals should do now
The immediate significance is procedural. Taxpayers and advisers with pending reassessment matters should identify who issued the Section 148 notice, how the Assessing Officer was allocated and whether the faceless mechanism was followed. The answer may affect the validity of the notice in matters governed by the reasoning of this judgment.
- Review pending writs, objections and appellate files involving the JAO-versus-faceless reassessment issue.
- Preserve the notice, DIN, portal communication, allocation trail and any material showing which Assessing Officer initiated the proceeding.
- Check whether the matter falls within the factual and legal period addressed by the judgment, particularly given Section 147A's stated retrospective operation from April 1, 2021.
- Track any appeal, stay or Supreme Court proceedings before treating the High Court ruling as the final nationwide position.
Important caveat on nationwide application
The decision is highly significant, but it should not be read as if every reassessment notice across India automatically stands cancelled. High Court judgments operate within the judicial hierarchy and may be appealed. Other High Courts have also expressed views in the broader reassessment controversy, and the September 10 judgment itself discusses decisions with which the Bench agreed and others from which it differed.
For CAs and tax litigators, the practical takeaway is to treat the ruling as a fresh, material authority on the validity of Section 147A and the continuing force of the faceless mechanism. Existing and new reassessment files should be screened promptly, but any litigation strategy should be aligned with the taxpayer's jurisdiction, procedural history and subsequent appellate developments.
Official source: View the official source document
Key takeaway
The Punjab and Haryana High Court has struck down retrospective Section 147A and quashed Section 148 notices not issued through randomised faceless allocation under Section 151A and the March 29, 2022 scheme.
