Section 147A Revives JAO Reassessment Jurisdiction: Karnataka High Court Sets Aside Single Judge Order and Remits for Fresh Consideration
Background and Context
The Karnataka High Court's Division Bench recently addressed a significant jurisdictional question arising out of the interplay between the faceless assessment regime and the authority of the Jurisdictional Assessing Officer (JAO) to initiate reassessment proceedings under the Income Tax Act, 1961. The matter came before the Division Bench by way of a writ appeal filed by the Revenue against a Single Judge's order that had quashed reassessment notices and the consequential order passed under Section 147 of the Income Tax Act, 1961.
The case — Union of India Vs Smt. Aisshwarya DKS Hegde (Karnataka High Court) — ultimately turned on a transformative legislative development that occurred while the Revenue's appeal was pending: the retrospective insertion of Section 147A into the Income Tax Act, 1961 by Act No. 4 of 2026.
Relevant Facts
The dispute originated when Smt. Aisshwarya DKS Hegde challenged notices issued under Section 148 and Section 148A of the Income Tax Act, 1961, along with a reassessment order passed under Section 147. The assessee contended before the Single Judge that the JAO did not possess the requisite authority to initiate reassessment proceedings once the faceless assessment framework under Section 151A had come into operation.
The Single Judge, vide order dated 28.08.2025 in W.P. No. 26825/2024, accepted this position and allowed the writ petition, thereby quashing the reassessment proceedings on the ground that the JAO lacked competence to issue the impugned notices.
This order formed the subject matter of the Revenue's writ appeal before the Division Bench. Crucially, while the appeal was pending, Parliament enacted Act No. 4 of 2026, which inserted Section 147A into the Income Tax Act, 1961 with retrospective effect from 01.04.2021.
The Legislative Development: Insertion of Section 147A
Section 147A, as introduced by Act No. 4 of 2026, reads as follows:
"147A. Notwithstanding anything contained in any judgement, order or decree of any court or in section 151A or in any scheme framed thereunder, for the removal of doubts, it is hereby clarified that the Assessing Officer for the purposes of sections 148 and 148A shall mean and shall always be deemed to have meant to be an Assessing Officer other than the National Faceless Assessment Centre or any assessment unit referred to in sub-section (3) of section 144B."
By operation of this provision, the JAO — i.e., an Assessing Officer other than the National Faceless Assessment Centre or any assessment unit under Section 144B(3) — is retrospectively recognised as having always been competent to issue notices under Section 148 and initiate proceedings under Section 148A. This retrospective declaration operates from 01.04.2021 and expressly overrides any contrary judicial pronouncement.
Issue Before the Division Bench
The Division Bench was confronted with two connected questions:
Whether the Single Judge's order quashing the reassessment proceedings could sustain its validity in light of the retrospective insertion of
Section 147A, which expressly recognised the JAO's authority underSection 148andSection 148A.Whether the Division Bench ought to itself adjudicate upon the constitutionality, scope, retrospective operation, and legal effect of
Section 147A, or whether it was more appropriate to remit the writ petition to the Single Judge, allowing both sides to raise comprehensive pleadings in accordance with the framework prescribed by the Supreme Court.
Revenue's Contentions
The Revenue placed strong reliance on the Supreme Court's order dated 10.04.2026 in Civil Appeal No. 4716/2026, reported in [2026] 185 Taxmann.com 1007 (SC). The Revenue submitted that Parliament had, from the very inception of the faceless regime, intended that reassessment notices could be issued by either the JAO or the Faceless Assessing Officer (FAO), with the subsequent quasi-judicial adjudication of such notices being handled through the faceless mechanism.