The controversy surrounding jurisdiction in a faceless income-escaping assessment stems from the interface between Section 151A of the Income-tax Act, 1961 (the Act) and the reassessment framework under Sections 147, 148 and 148A, particularly in the context of Jurisdictional Assessing Officers (JAOs) vis-à-vis Faceless Assessing Officers (FAOs).

This controversy, which initially played out as a narrow question of “who can issue a notice under Section 148”, has now evolved into a much larger constitutional and structural debate on the reassessment regime itself.

The subsequent retrospective insertion of Section 147A by the Finance Act, 2026, with effect from 1 April 2021, has reignited legal and constitutional debates around legislative competence, separation of powers, and the integrity of the faceless reassessment regime.

Statutory framework: Section 151A and the Faceless Reassessment Regime

Section 151A of the Act empowers the Central Government to frame a scheme, by notification in the Official Gazette, for:

• assessment, reassessment or re-computation under Section 147;
• issuance of notice under Section 148;
• conduct of enquiries or issuance of show-cause notice or passing of order under Section 148A; and
• grant of sanction for issue of such notice under Section 151,

with the objective of imparting greater efficiency, transparency and accountability in tax administration.

In exercise of powers under Section 151A(1) and (2), the Central Board of Direct Taxes (CBDT) notified the E-assessment of Income Escaping Assessment Scheme, 2022, by notification dated 29 March 2022, which provides that  assessment, reassessment or re-computation under Section 147 and issuance of notice under Section 148 shall be undertaken through automated allocation, in accordance with the risk management strategy formulated by the Board as referred to in Section 148, and in a faceless manner to the extent provided in Section 144B with reference to making assessment or reassessment of total income or loss of the assessee.

Read together, Section 151A and the 2022 Scheme were understood to mean that reassessment-related proceedings (including the issuance of reopening notices) were to be conducted through the faceless framework rather than by individual jurisdictional officers. On this basis, it was argued that a JAO lacked authority to issue a notice under Section 148, as this would be contrary to Section 151A and the notified faceless scheme.

Judicial response prior to the 2026 amendment

In view of the above provisions and notifications, notices u/s 148 issued by jurisdictional Assessing Officers were widely contested before Courts.

In the case of Kankanala Ravindra Reddy v. ITO [TS-539-HC-2023(TEL)], the High Court examined the implications of the “Faceless Jurisdiction of Income-tax Authorities Scheme, 2022” and the “E-assessment of Income Escaping Assessment Scheme, 2022” and held that, following these schemes, it became mandatory for the Revenue to initiate and conduct reassessment proceedings under Sections 147, 148 and 148A in a faceless manner.

In the case of Hexaware Technologies Ltd. v. ACIT [TS-298-HC-2024(BOM)], the Bombay High Court held that there is no question of concurrent jurisdiction of JAO and FAO for issuance of reopening notice under section 148 and it is only FAO which could issue notice under section 148 and not JAO.

After elaborating the express provisions of Section 151A and E-assessment scheme notified by CBDT, these rulings have emphasized on the settled principle[1] that if statute provides for a thing to be done in a particular manner, then it has be done in that manner and if it is not done in that manner, it has no existence in the eyes of law. Relying on the said principle, the Courts have invalidated numerous reassessment notices. The Revenue’s appeals against these rulings were pending before the Supreme Court, and this background forms the backdrop to the subsequent legislative response.

Legislative Response: Finance Act, 2026 and the Insertion of Section 147A

The Finance Act, 2026 retrospectively inserted Section 147A into the Income‑tax Act, 1961 with effect from 1 April 2021, providing that, for the purposes of Sections 148 and 148A, the “Assessing Officer” shall, and shall always be deemed to, exclude the National Faceless Assessment Centre and assessment units under Section 144B(3).

The Memorandum to the Finance Bill, 2026 explains that the legislature intends to clearly separate the pre‑assessment enquiry stage from the assessment/reassessment stage: the JAO is to carry out the pre‑assessment enquiry, form satisfaction and issue the notice under Section 148, while the subsequent reassessment is to be completed in a faceless manner by NaFAC.

Through this deeming fiction, Section 147A seeks to vest, and retrospectively validate, the power to initiate reassessment in JAOs and thereby regularise notices and proceedings issued by them under Sections 148 and 148A from 1 April 2021 onwards.

A corresponding provision has been enacted in the new Income‑tax Act, 2025: Section 279(3), effective from 1 April 2026, provides that for Sections 280 and 281, “Assessing Officer” excludes NFAC and the various faceless assessment units, aligning the new Act with the position under Section 147A.

Taken together, Section 147A in the old Act and Section 279(3) in the new Act are intended to clarify that JAOs are the primary authorities for pre‑assessment enquiries and issue of notices, while NaFAC completes the reassessment, with the stated objectives of ensuring uniform interpretation, reducing litigation and providing certainty. At the same time, by employing a retrospective deeming fiction, the amendments effectively re‑cast the jurisdictional framework for the period starting 1 April 2021, which is what has prompted the current round of constitutional challenges.

Post-Amendment Developments and Constitutional Challenges

Following the retrospective insertion of Section 147A by the Finance Act, 2026, the Supreme Court, by order dated 3 February 2026, permitted the Revenue to seek review of High Court decisions that had quashed reassessment notices issued by JAOs on jurisdictional grounds.

In the wake of this amendment, multiple writ petitions have been filed before the Karnataka, Bombay, Punjab & Haryana and Kerala High Courts, challenging the constitutional validity and retrospective operation of Section 147A and related provisions. The principal grounds include that:

• Section 147A retrospectively confers substantive reopening jurisdiction on JAOs, validating actions alleged to be void ab initio and effectively nullifying prior judicial pronouncements without curing the underlying jurisdictional defect, thereby undermining rule of law and judicial discipline.
• The amendment creates new rights and powers with effect from 1 April 2021, said to be unfair, arbitrary and contrary to the earlier statutory and scheme framework, and should, if at all, operate only prospectively.
• By expressly targeting matters pending before the Supreme Court, the retro‑amendment is alleged to interfere with the administration of justice and violate the constitutional principle of separation of powers by allowing the Legislature to intrude into the judicial domain.
• The provision is challenged as violative of Articles 14, 19(1)(g), 21 and 265 of the Constitution and is sought to be struck down or read down as purely prospective.
• The sweeping non‑obstante clause overriding Section 151A and the Faceless Assessment Scheme for the relevant period is said to create statutory inconsistency and dilute the legislative commitment to transparency and accountability in tax administration.

Taking note of these issues, a Bench of the Supreme Court led by the Chief Justice, by order dated 10 April 2026, set aside the earlier High Court judgments on the JAO–FAO issue and remitted the matters to the respective High Courts for fresh consideration; granted assessees liberty to amend their writ petitions within four weeks to challenge Section 147A and connected provisions; directed that further assessment or reassessment pursuant to the impugned notices remain stayed during pendency of the writs (subject to conditions to be fixed by the High Courts); and requested that the High Courts decide these matters preferably by 30 September 2026.

These developments have shifted the focus of the controversy from a narrow jurisdictional dispute under the pre‑amendment regime to wider constitutional and interpretative scrutiny of the validity, scope and retrospective reach of Section 147A.

Doctrine on Validating Legislation

With the constitutional validity of the retrospective amendment under challenge, it is important to distinguish between: (i) a law that simply seeks to overrule or nullify a judicial decision – which is impermissible as it amounts to the legislature exercising judicial power; and
(ii) a law that amends the statutory framework (even retrospectively) to remove or alter the legal basis on which the court had decided the earlier case – which is permissible, even if it effectively “neutralises” that decision.

Courts have laid down three cumulative conditions for a valid “curative” or validating statute:

• Legislative competence: the legislature must be constitutionally competent to legislate on the subject.
• Actual curing of the defect: the amendment must genuinely remove or modify the legal or factual defect identified by the court (for example, by conferring missing rule‑making power, changing a definition, inserting a deeming clause, or restructuring the charging/machinery provisions).
• Non‑arbitrariness and reasonableness: retrospective fiscal amendments must not be arbitrary, unreasonable, confiscatory or unduly harsh in their operation.

The writ petitions before various High Courts will assess Section 147A against these parameters, and their decisions will determine both its constitutional validity and the extent of its retrospective reach, including how reassessment proceedings during the relevant period are to be treated. Ironically, a measure aimed at bringing certainty and reducing litigation has, at least in the short term, spawned fresh constitutional and interpretative disputes across multiple High Courts, prolonging uncertainty for taxpayers and the Revenue alike.

Practical implications and interim strategy

The retrospective amendment and the Supreme Court’s directions will significantly impact the large number of appeals and writ petitions where JAO–FAO jurisdictional challenges have been raised. Broadly, three categories of cases can be identified:

• Cases where notices were quashed solely on JAO–FAO jurisdiction grounds (no merits examined).
• Cases where jurisdictional and other technical/merits grounds were raised, but only jurisdiction was decided.
• Cases where reassessments were upheld despite the JAO–FAO objection.

In this backdrop, important questions arise: whether the Revenue can seek review or recall of orders granting relief purely on JAO–FAO grounds; and whether completed assessments, refunds granted, or time‑barred years where such relief was given can be re‑agitated under the cover of retrospective jurisdiction, and by what procedural route.

From the assessee’s perspective, it would be prudent to:

• review all pending matters and supplement or shift focus from pure jurisdictional objections to robust arguments on other technical aspects of the reassessment (e.g. information suggesting escapement, compliance with Section 148A, limitation under Section 149, sanction/approval defects, change of opinion, scope of additions under Section 147), in addition to merits;
• simultaneously preserve all constitutional and legal grounds relating to the validity, interpretation and application of Section 147A and the overriding non obstante framework; and
• maintain a clear “matter‑wise matrix” (stage of proceedings, grounds already urged, scope for amending pleadings, and potential exposure if Section 147A is upheld with full retrospective effect) to prioritise cases and allocate resources efficiently.

Conclusion

The insertion of Section 147A with retrospective effect from 1 April 2021 marks a significant legislative intervention aimed at preserving and consolidating reassessment jurisdiction in favour of JAOs, even in the midst of a faceless regime envisaged under Section 151A and schemes that were interpreted as FAO‑centric. With multiple High Courts now examining challenges based on constitutional guarantees, separation of powers and the perceived dilution of the faceless assessment architecture, the coming months will be pivotal in determining the future contours of reassessment law and the equilibrium between legislative design and judicial review in tax administration.

 The ultimate outcome will depend on how the doctrine of validating legislation is applied to Section 147A—whether it is upheld as a genuine curative measure that lawfully removes the basis of earlier rulings, or struck down or read down as an impermissible attempt to legislatively overrule prior judgments and retrospectively enlarge substantive powers. Until definitive guidance emerges from the High Courts and, in due course, the Supreme Court, both taxpayers and the Revenue will operate in a legally complex, fact‑sensitive environment, where litigation strategy, timing and careful preservation of all procedural, substantive and constitutional rights will assume critical importance.

[1] Chandra Kishore Jha v. Mahaveer Prasad [1999] 8 SCC 266, Tata Chemicals ltd. v. Commissioner of Customs (Preventive), Jamnagar[2015] (SC)