Bombay High Court Halts Reassessment for Taxpayers Challenging Section 147A Constitutional Validity

Protection for Taxpayers Challenging Section 147A

The Bombay High Court on 2 September 2026 directed the Income Tax Department not to proceed with reassessment proceedings against taxpayers who have challenged the constitutional validity of Section 147A of the Income Tax Act, 1961. The interim order, passed by a Division Bench of Justices B.P. Colabawalla and Farhan P. Dubash, applies even to matters not listed with the main batch of petitions.

The court has been hearing the lead petition by Bharat Petroleum Corporation Limited and a large number of other writ petitions on a day-to-day basis since 31 August 2026. Many of these petitions had already been granted interim protection.

Procedural Hurdles Addressed

The court also addressed a procedural issue: several writ petitions challenging notices under Section 148 of the Act had been filed before different benches and were later transferred to this bench. However, some of these petitions had not been renumbered after transfer, preventing the petitioners from amending their pleadings to specifically challenge the constitutional validity of Section 147A. The court held that this should not prejudice the petitioners and directed the assessing officers not to proceed with reassessment or recovery proceedings in those matters as well.

Interim Relief Granted

The court's order is interim in nature and does not determine the constitutional validity of Section 147A, which remains under consideration. The key direction from the judgment states:

"Considering the above, we direct that in none of the matters in which the constitutional validity of Section 147A of the IT Act is challenged and pressed, even though not listed with the aforesaid batch, the Assessing Officers shall not proceed further with the reassessment proceedings ."

The order also covers matters where the petitioners are unable to carry out amendments to challenge the constitutional validity of Section 147A due to procedural delays. The court directed that the concerned assessing officers shall not proceed with reassessment proceedings and/or recovery proceedings in such cases.

The bench clarified that the order would be digitally signed and that all concerned shall act on production by fax or email of a digitally signed copy.

The matter continues to be heard on the constitutional validity of Section 147A.