Delhi High Court Allows Amendment, Maintains Status Quo in Section 147A Reassessment Challenge

The Delhi High Court has permitted two assessees to amend their writ petitions to challenge the constitutional validity of Section 147A of the Income Tax Act, 1961, while directing that status quo be maintained on recovery and penalty proceedings in the interim.

The division bench of Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta was hearing petitions filed by Neena Wadhwa and Surender Kumar Wadhwa , who had challenged reassessment notices issued under the Income Tax Act.

A Tale of Two Courts

The journey to this hearing was circuitous. The petitioners' writ petitions were originally dismissed by the High Court in 2025. They then approached the Supreme Court of India, which — while dealing with a batch of matters concerning the legality of reassessment notices issued by the Jurisdictional Assessing Officer instead of through the faceless mechanism — remanded the cases back to the High Court.

The Supreme Court's order of July 16, 2026 effectively revived the writ petitions. This rendered the petitioners' applications for revival of the main cases "mis-conceived," as the court observed, since the restoration had already been effected by the Apex Court.

The Section 147A Challenge

The core of the dispute lies in Section 147A, inserted by the Finance Act, 2026 with retrospective effect from April 1, 2021. The provision declares that, for the purposes of Sections 148 and 148A of the Income Tax Act, the expression "Assessing Officer" shall mean an Assessing Officer other than the National Faceless Assessment Centre.

The petitioners contend that prior to this enactment, the scheme framed under Section 151A mandated faceless issuance of reassessment notices, and the Jurisdictional Assessing Officer lacked jurisdiction to issue such notices outside the faceless mechanism. They argue that Section 147A's retrospective operation seeks to validate reassessment actions that were legally infirm, and impermissibly nullifies judicial pronouncements by retroactively deeming the JAO to have had jurisdiction.

Amendment Allowed, Status Quo Ordered

The court allowed the amendment applications filed under Order VI Rule 17 read with Section 151 of the Code of Civil Procedure, 1908, taking the amended writ petitions on record. The Income Tax Department was directed to file its replies within two weeks.

"Status-quo in relation to recovery and penalty proceedings shall be maintained till then," the court ordered, providing immediate relief to the assessees against coercive recovery action .

No Locus for the Complainant

The court also dealt with an application filed by a person claiming to be the complainant at whose behest the Income Tax Department had initiated the reassessment proceedings. He sought to be impleaded as a necessary party.

The court decisively rejected the application, observing: "the applicant is nothing more than a complainant and he has no locus to intermingle in the proceedings."

The bench further clarified: "The petitioner has challenged the action taken by the respondent/Assessing Officer and it is the AO, who has to defend the action taken by him."

What Lies Ahead

The matters have been listed for further hearing on August 24, 2026. With the amendments now on record and the department's replies due within two weeks, the stage is set for a substantive hearing on the constitutional validity of Section 147A — a provision whose retrospective operation has significant implications for reassessment proceedings across the country.