Under the Income Tax Act, the law lays down a set procedure for carrying out assessments of income tax returns. The procedure for assessing tax returns as filed, is slightly different from the procedure adopted to assess tax returns which arise out of information that comes to the knowledge of the Income Tax Department or arising after search and seizure. The second category of assessment is known as assessment of incomes that have escaped assessment or incomes concealed by way of failure to declare.<\/p>\n\n\n\n
The procedure to assess income, which was concealed or which escaped assessment, was covered by Sections 148A, 149, 151A and 147 of the erstwhile Income Tax Act, 1961. The Act stands repealed w.e.f. 1 April 2026.<\/p>\n\n\n\n
Through the Finance Act, 2026, Parliament inserted Section 147A in the Income Tax Act, 1961 to have retrospective effect from 1 April 2021. The section was introduced as on 1 April 2026. On the same date, Income Tax Act, 2025 came into force. The 2025 Act expressly repealed the 1961 Act. As is generally the case, the section repealing the 1961 Act provided for certain specific savings of the 1961 Act along with general savings through Section 6 of the General Clauses Act, 1897.<\/p>\n\n\n\n
The background of the purpose of inserting S. 147A, is very glaring. The authority to issue notice under Section 148 for purpose of carrying out re-assessment vested with the Faceless Assessment Officer (FAO) as provided for under Section 151A of the 1961 Act. This provision was very clear and could not have been read or interpreted otherwise. The notices were however issued by the Jurisdictional Assessing Officers (JAO) in the case of many assessees. Such notices came to be challenged. The Bombay High Court, in Hexaware Technologies Ltd. V. Assistant Commissioner of Income Tax ([2024] 162 taxmann.com 225 [Bombay]) held that a section 148 notice issued by the JAO were beyond jurisdiction and deserved to be quashed and set aside. Quashing of such S.148 notices meant that the Department could not proceed with the reassessment on the ground of notices being bad in law.<\/p>\n\n\n\n
Similar decisions came about across various High Courts in the country. All these matters thereafter landed in multiple SLPs before the Apex Court. The Revenue was at a clear risk of losing the appeals. <\/p>\n\n\n\n
Section 147A was therefore inserted by the Finance Act, 2026 not just<\/strong> to negate all judgements on the issue, but also to negate Section 151A itself by providing a clarification<\/strong> that the term \u201cAssessing Officer\u201d as used in Sections 148 and 148A would always have to be read as the Jurisdictional Assessing Officer.<\/p>\n\n\n\n After the insertion of Section 147A, the SLPs pending before the Supreme Court came to be dismissed. However, the Supreme Court in its order restored all the Writs to the files of the individual High Courts allowing all the assessees (petitioners) to first challenge the constitutionality of the insertion of Section 147A.<\/p>\n\n\n\n The Bombay High Court, as would be the other High Courts, is now seized of the challenge to the constitutionality of insertion of a section in an enactment which was expressly repealed by a succeeding tax legislation.<\/p>\n\n\n\n The last on the issue is yet to be heard.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"Under the Income Tax Act, the law lays down a set procedure for carrying out assessments of income…\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"csco_singular_sidebar":"","csco_page_header_type":"","csco_custom_appearance":"","csco_disable_excerpt_posts_layout":false,"csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0},"categories":[41,39],"tags":[42,44,48],"_links":{"self":[{"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/posts\/4287"}],"collection":[{"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/comments?post=4287"}],"version-history":[{"count":2,"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/posts\/4287\/revisions"}],"predecessor-version":[{"id":4289,"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/posts\/4287\/revisions\/4289"}],"wp:attachment":[{"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/media?parent=4287"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/categories?post=4287"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legallectual.com\/index.php\/wp-json\/wp\/v2\/tags?post=4287"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}