Himachal Pradesh High Court permits taxpayer to re-challenge reassessment proceedings under Section 147A, following Supreme Court's remand directing High Courts to re-examine such cases.
Himachal Pradesh HC Allows Fresh Challenge to Section 147A Proceedings
The Himachal Pradesh High Court has permitted a taxpayer to file a fresh challenge to reassessment proceedings initiated under Section 147A of the Income Tax Act, 1961, after the Supreme Court remanded similar matters to respective High Courts for reconsideration. The remand follows a larger constitutional query on the validity and application of Section 147A, which enables the Assessing Officer (AO) to independently assess the 'reason to believe' before initiating reassessment.
The Supreme Court, in a line of recent decisions, has directed that reassessment cases relying on Section 147A—inserted by the Finance Act, 2022—be referred back to High Courts for fresh adjudication, especially where the jurisdictional High Court had previously struck down or stayed such proceedings. The Court emphasized that reassessments lacking a valid, recorded reason for initiating proceedings are liable to be quashed.
Where the Supreme Court has remanded jurisdiction, High Courts are now re-examining the vires and application of Section 147A in light of settled principles of audi alteram partem and protection against arbitrary state action under Article 14.
Practitioners should reconsider pending reassessment disputes, particularly where initiation was based solely on jurisdictional verification rather than fresh material. The ruling reinforces the necessity for procedural fairness and reasoned orders in initiating tax scrutiny beyond the original assessment cycle.
Citations
- Section 147A, Income Tax Act, 1961
