The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that the insertion of Section 147A by the Finance Act, 2026, even with retrospective effect, did not create a “mistake apparent from the record” in an order passed before the amendment became law.

The bench of Vijay Pal Rao (Vice President) and Madhusudan Sawdia (Accountant Member) has observed that its 2025 decision had followed the legal position and High Court judgments available when it was passed. It held that the subsequent insertion of Section 147A did not, by itself, establish an apparent mistake in that decision. Accepting the Department’s application would require the Tribunal to revisit the merits of a concluded order, rather than correct an obvious error in it.

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The dispute arose from a reassessment notice issued by a jurisdictional assessing officer under Section 148 of the Income Tax Act, 1961, for assessment year 2018–19. In its order dated November 12, 2025, read with a corrigendum dated November 17, 2025, the Tribunal allowed Meghana Enterprises’ appeal on the ground that the officer lacked authority to issue the notice under the law as it was then understood. The Tribunal had relied on judicial decisions, including the Telangana High Court’s ruling in Kanakala Ravinder Reddy v. ITO.

The Department subsequently sought recall of that order through a miscellaneous application under Section 254(2). That provision permits the Tribunal to correct a mistake apparent from the record. The Department argued that Parliament had inserted Section 147A with effect from April 1, 2021, clarifying that an assessing officer other than the National Faceless Assessment Centre or an assessment unit could issue notices under Sections 148 and 148A.

According to the Department, the retrospective amendment changed the legal basis on which the Tribunal had quashed the reassessment notice. It also relied on the Supreme Court’s April 10, 2026 order in Income Tax Officer v. Tej Partap Singh, which set aside certain High Court judgments on the jurisdictional officer issue and remanded the matters for fresh consideration.

The Department submitted that the Tribunal’s earlier order had granted the parties liberty to seek restoration if the judgments on which it relied were set aside. It therefore asked the Tribunal to revive the appeal and reconsider the reassessment proceedings under the amended law.

The assessee opposed the application. It argued that the Supreme Court had not finally decided the underlying issue and that a later amendment could not turn an order, correctly passed under the law then prevailing, into an apparent mistake suitable for rectification.

The Bench referred to an earlier Hyderabad Tribunal order on the same issue and to the Telangana High Court’s decision in PCIT-4, Hyderabad v. Vinod Ojha. As discussed in the order, the High Court had declined to entertain a challenge based on Section 147A to a Tribunal ruling made before the amendment. The Bench also relied on decisions addressing the limits of the Tribunal’s rectification power.

The Tribunal noted that the Punjab and Haryana High Court had declared the 2026 amendment to Section 147A unconstitutional in Jyoti Sareen v. Union of India. According to the order, the Department’s challenge to that judgment was pending before the Supreme Court.

That continuing dispute was another reason the Bench considered the issue unsuitable for proceedings confined to correcting an apparent mistake. The Tribunal did not decide the ultimate validity of Section 147A or finally resolve the wider question of which officer could issue the reassessment notice.

Dismissing the Department’s miscellaneous application on September 23, 2026, the Tribunal left its earlier order in Meghana Enterprises’ favour undisturbed.

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