DCIT Vs Divyasree Infrastructure Projects Pvt. Ltd. (Karnataka High Court)
JAO Reassessment Gets a Legislative Lifeline: Karnataka HC Revives Revenue’s Appeal After Retrospective Section 147A Rewrite
Relevant Facts
In Deputy Commissioner of Income Tax & Others v. Divyasree Infrastructure Projects Pvt. Ltd., the Karnataka High Court’s Division Bench considered the Revenue’s writ appeal against the Single Judge’s order dated 24.09.2025 in W.P. No.11207/2025. The Single Judge had allowed the assessee’s writ petition challenging notices u/s 148/148A & the consequential reassessment order u/s 147 of the Income-tax Act, 1961.
The controversy concerned the competence of the Jurisdictional AO or JAO to initiate reassessment after introduction of the faceless regime. High Courts had differed on whether notices must issue through the faceless mechanism or could be issued by the JAO. The Single Judge held that the JAO lacked competence.
During the appeal, Parliament enacted Act No.4 of 2026, inserting section 147A retrospectively from 01.04.2021. Notwithstanding any judgment, section 151A or related scheme, it declares that the AO for sections 148 & 148A means, & always meant, an officer other than the National Faceless Assessment Centre or an assessment unit u/s 144B(3).
This legislative development substantially altered the foundation on which the Single Judge had quashed the reassessment proceedings.
