Union of India & Ors. Vs Bharat Industrial Enterprises Pvt. Ltd. (Supreme Court of India)
Summary: The Supreme Court, in Union of India & Ors. Vs Bharat Industrial Enterprises Pvt Ltd, granted leave to appeal against the Punjab and Haryana High Court judgment dated 10 September 2026 declaring Section 147A of the Income-tax Act, 1961 unconstitutional. The Court stayed the operation of that judgment, but expressly directed that assessment and reassessment proceedings shall not proceed further until final disposal of the main appeal. The constitutional validity of Section 147A has not been finally decided.
The dispute concerns whether notices under Sections 148 and 148A must be issued exclusively by the Faceless Assessing Officer or may also be issued by the Jurisdictional Assessing Officer. The Revenue questioned the High Court’s interpretation of Section 144B and the scheme dated 29 March 2022 framed under Section 151A, contending that the statutory faceless framework does not necessarily displace jurisdictional officers at the notice-issuance stage.
The Revenue also raised the absence of a notification under Section 120 empowering Faceless Assessing Officers to perform these functions or excluding the jurisdiction of Jurisdictional Assessing Officers. A further question concerns whether Section 147A validly removes the legal defect identified in earlier High Court decisions by specifying the competent Assessing Officer notwithstanding the faceless scheme and previous judgments. These are questions identified for consideration, not findings finally pronounced by the Supreme Court.
By its order dated 18 September 2026 in SLP(C) No. 33196/2026, the Supreme Court granted leave and stayed the High Court judgment subject to the restriction on further assessment and reassessment proceedings. The appeal was directed to be listed for final hearing on 3 December 2026. The interim order should not be described as a final ruling upholding Section 147A.
FULL TEXT OF THE JUDGMENT/ORDER OF SUPREME COURT OF INDIA
1. Heard Mr. N. Venkatarman, the learned ASG appearing for the Revenue.
2. By the impugned Judgment, the High Court has declared Section 147A of the Income Tax Act 1961, (for short, “the Act, 1961”), as unconstitutional.
3. Broadly, three questions arise for our consideration:-
(i) Whether the High Court erred in holding that the notices under Section 148 and Section 148A respectively must be issued only by the Faceless Assessing Officer more particularly when Section 144B, the sole repository of the Faceless Regime, makes no reference to Sections 148 and 148A respectively and the scheme dated 29.03.2022 framed under Section 151A restricts the application of the faceless manner to the extent provided in Section 144B?
(ii) Whether the High Court erred in holding that the notices under Section 148 and 148A respectively must be issued only by the Faceless Assessing Officer, overlooking the fact that no Notification under Section 120 was ever issued by the Board which empowered the Faceless Assessing Officer to perform such functions or ousted the jurisdiction of the Jurisdictional Assessing Officer from performing such functions?
(iii) Whether the High Court erred in holding that Section 147A does not pass the muster of a Validation Enactment, overlooking the fact that Section 147A operates notwithstanding any Judgement, Section 151A and the Scheme dated 29.03.2022 framed under Section 151A, and prescribes the Assessing Officer for the purposes of Sections 148 and 148A respectively, which is not the Faceless Assessing Officer, thereby removing the defect pointed out by various High Courts and clarifying the position as to who the Assessing Officer is?
4. Leave granted.
5. The impugned judgment and order passed by the High Court shall remain stayed from its operation on the condition that the assessment and reassessment proceedings shall not proceed further till the final disposal of the main matter.
6. Notify this appeal for final hearing on 03.12.2026.
