Karnataka High Court remands reassessment dispute after Supreme Court directions on Section 147A

The Karnataka High Court, in DCIT Vs Motorola Mobility India Pvt. Ltd., has followed the recent directions of the Supreme Court concerning reassessment proceedings under Section 147, Section 148, and Section 148A of the Income Tax Act 1961, particularly in light of the newly inserted Section 147A. Instead of adjudicating the merits of the dispute, the Division Bench has set aside the earlier order of the learned Single Judge and sent the matter back for a fresh examination, giving liberty to the assessee to directly challenge Section 147A and connected provisions.

This decision aligns with the Supreme Court’s approach in Civil Appeal No. 4716/2026 dated 10.04.2026 and a subsequent order dated 04.05.2026, where the Apex Court dealt with the retrospective clarification of the term “Assessing Officer” and the consequences for reassessment notices issued during the relevant period.

Case background and procedural history

Origin of the writ appeal

  • The writ appeal before the Karnataka High Court was one among several similar matters arising out of reassessment disputes.
  • It was filed under Section 4 of the Karnataka High Court Act 1961 by the Revenue (appellants) against a judgment dated 05.12.2025 of the learned Single Judge in W.P.No.36678/2025.
  • In that writ petition, the assessee had challenged:
    • notices issued under Section 148 / Section 148A of the Income Tax Act 1961; and/or
    • the reassessment order passed under Section 147 of the Act.
  • The learned Single Judge had allowed the writ petition in favour of the assessee, leading the Revenue to prefer the present writ appeal.

During the hearing before the Division Bench, both sides agreed that the appeal could be disposed of finally, and they drew the Court’s attention to recent Supreme Court pronouncements that directly impacted the legal foundation of such reassessment matters.

Supreme Court’s intervention: insertion of Section 147A and its implications

Retrospective clarification of “Assessing Officer”

The parties specifically relied upon the Supreme Court’s order dated 10.04.2026 in Civil Appeal No. 4716/2026, reported in [2026] 185 Taxmann.com 1007 (SC). The Apex Court, in that matter, considered the effect of the insertion of Section 147A into the Income Tax Act by Act No. 4 of 2026, which:

  • inserted a new Section 147A after Section 147; and
  • declared that it shall be deemed to have been inserted with effect from 01.04.2021.

The exact text of Section 147A, as quoted by the Supreme Court, was reproduced by the Karnataka High Court and remains binding in its original language.

Key legislative clarification:
Section 147A clarifies, notwithstanding any judgment, order or decree of any court, that for purposes of Section 148 and Section 148A, the term “Assessing Officer” is and shall always be taken to mean an officer other than the National Faceless Assessment Centre (NFAC) or any assessment unit referred to in Section 144B(3).

The Supreme Court also noted that Section 279 of the Income Tax Act, 2025 had been amended to align with the newly inserted Section 147A. The amendment clarified that for the purposes of Sections 280 and 281, “Assessing Officer” shall similarly exclude NFAC and specified assessment units. The amended text of Section 279(3) was reproduced verbatim in the Supreme Court’s order and was set out in the Karnataka High Court judgment as well.

Rival contentions recorded by the Supreme Court

Revenue’s stand

The Supreme Court, in its 10.04.2026 order, recorded the Revenue’s submissions, including that: