The Andhra Pradesh High Court has reportedly allowed a batch of writ petitions challenging Section 147A of the Income-tax Act, 1961, holding the provision unconstitutional in a significant development in the controversy over the powers of the Faceless Assessing Officer (FAO) and the Jurisdictional Assessing Officer (JAO).

The Court has delivered an approximately 150-page judgment examining several aspects of the dispute. These include mandatory automated allocation under the faceless scheme, the absence of corresponding amendments to other statutory provisions, whether the legislative amendment removed the basis of earlier judgments, and the constitutional limits on legislative intervention in judicial decisions.

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What Is The FAO–JAO Controversy?

The dispute concerns which income-tax authority can lawfully initiate reassessment proceedings: the taxpayer’s jurisdictional assessing officer or an officer assigned through the faceless mechanism.

A JAO ordinarily exercises jurisdiction over a taxpayer under the Department’s jurisdictional arrangements. The faceless framework, in contrast, provides for proceedings through an electronic system, with allocation mechanisms intended to reduce direct interaction and discretion in assigning cases.

The controversy is significant because the authority issuing a reassessment notice must possess the jurisdiction required by law. A challenge to that authority concerns the validity of the initiation of proceedings, independently of whether the taxpayer has actually understated income.

Section 147A And Its Retrospective Effect

Section 147A was inserted through Section 9 of the Finance Act, 2026, with deemed effect from April 1, 2021.

The provision specifies that, for Sections 148 and 148A, the assessing officer is an officer other than the National Faceless Assessment Centre or an assessment unit referred to in Section 144B(3). It operates through an overriding clause referring to court judgments, Section 151A and schemes framed under that section. The official statutory text describes the provision as a clarification intended to remove doubts.

This legislative intervention brought the constitutional validity of the retrospective provision into focus. The question extends beyond the identity of the officer competent to act: it concerns whether the amendment validly changes the legal framework underlying earlier judicial decisions.

Mandatory Automated Allocation Under The Scheme

According to the supplied update, mandatory automated allocation is among the principal issues examined in the judgment.

The issue is whether allocation through the prescribed electronic mechanism constitutes a binding safeguard governing reassessment proceedings. If automated allocation is mandatory, the competence of an officer cannot necessarily be assessed solely by reference to the officer’s designation.

The dispute therefore involves both who may issue a notice and how that officer must be assigned the matter. The full judgment will clarify how the Court has interpreted these requirements and their relationship with Section 147A.

Absence Of Corresponding Amendments

Another issue reportedly considered is the absence of appropriate amendments to other provisions governing reassessment and the faceless framework.

The underlying question is whether inserting an overriding provision concerning the meaning of “Assessing Officer” sufficiently resolves the interaction between existing statutory provisions and the scheme framed under them.

The petitioners’ challenge, as reflected in the update, raises the concern that changing one provision without appropriately addressing related requirements may leave the statutory framework internally inconsistent.

The Court’s detailed reasoning will be necessary to identify which provisions it considered material and why the amendment was found constitutionally deficient.

Whether The Basis Of Earlier Judgments Was Removed

The judgment reportedly examines whether Section 147A removed the legal foundation of earlier decisions concerning JAO-issued reassessment notices.

This is central to the controversy over legislative validation. The constitutional issue is whether Parliament changed the underlying law sufficiently to cure the defect identified by courts, or sought to override judicial outcomes while leaving the relevant defect unresolved.

The supplied update indicates that the failure to remove the basis of earlier judgments formed part of the matters addressed. The precise connection drawn between this issue and the declaration of unconstitutionality requires confirmation from the full order.

Separation Of Powers And Legislative Overreach

The approximately 150-page decision also reportedly discusses separation of powers and legislative overreach.

The dispute raises questions about the respective functions of the legislature and the judiciary. Parliament makes and amends laws, while constitutional courts examine their validity and interpret their operation.

In this context, the important distinction is between an amendment that validly changes the law underlying a judicial decision and legislation that impermissibly displaces the judicial determination itself.

According to the update, these constitutional limits were among the facets examined by the Andhra Pradesh High Court in allowing the petitions.

Uncertainty Created By The Amendment

The update further identifies “chaos” resulting from the amendment as an issue discussed in the judgment.

The concern relates to the operation of reassessment provisions alongside the faceless scheme and the retrospective treatment of proceedings initiated under the earlier framework.

For taxpayers and the Department, clarity is essential on the competent authority, the allocation procedure and the statutory requirements applicable to a particular notice. Uncertainty on these matters can generate disputes before the merits of the alleged escaped income are considered.

The full order will establish whether the Court treated these concerns as an independent ground or as part of its broader constitutional analysis.

April 1 Commencement And The Retrospective Date

The judgment reportedly addresses the position that the Finance Act, 2026 became applicable from April 1, 2026, rather than March 30, 2026.

That commencement issue must be distinguished from Section 147A’s expressly stated deemed operation from April 1, 2021. The official provision contains the latter retrospective date. 

The distinction matters because the commencement of an amending enactment and the retrospective period assigned to a particular amendment are separate legal questions. The judgment will need to be examined to determine how the Court applied that distinction to the proceedings before it.

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