Faceless Reassessment after S. 147A: What the Supreme Court Did – and Did Not – Decide

“The proliferation of statutes and regulations has sometimes made it difficult for the average citizen to know and comprehend the extent of the duties and obligations imposed by the tax laws.”

Cheek v. United States, 498 US 192 (1991)

Introduction

The faceless assessment regime was never only about moving tax files from paper to portal. It changed the identity of the statutory actor who communicates with the taxpayer, examines the record, prepares the order and completes the assessment. That is why the dispute concerning on Jurisdictional Assessing Officers (‘JAO’) and Faceless Assessing Officers (‘FAO’) is not merely a technical argument about department allocation, but a question of statutory authority.

The Supreme Court’s order dated 10.04.2026 in Tej Pratap Singh, rendered by Hon’ble CJI Surya Kant, J. BV Nagarathna and J. Joymalya Bagchi, sits exactly at this point of friction. It concerns reassessment notices and orders issued by JAOs after the faceless reassessment scheme was notified. The order is important because the Supreme Court did not decide the core question on merits. It remanded the matters to the High Courts after Parliament inserted s. 147A retrospectively vide Finance Act, 2026.

The Origin of Faceless Assessment

The faceless assessment story began much before the reassessment controversy. The Finance Act, 2018 inserted ss. 143(3A) to 143(3C) into the Income-tax Act, 1961 (‘Act’) with effect from 01.04.2018. These provisions empowered the Central Government to notify a scheme for assessment of total income or loss so as to impart efficiency, transparency and accountability by eliminating interface between the AO and the assessee to the extent technologically feasible, optimizing resources through economies of scale and functional specialization, and introducing team-based assessment with dynamic jurisdiction.

That power was used in 2019 to notify the E-assessment Scheme, which created the National e-Assessment Centre (‘NeAC’), Regional e-Assessment Centres (ReAC) and assessment, verification, technical and review units. The NeAC was vested with jurisdiction to make assessments under the scheme, and all communications among the units, or with the assessee, were routed through it.

In 2020, the E-assessment Scheme was amended and renamed as the Faceless Assessment Scheme, 2019. Thereafter, two sections came into the picture vide TOLA, 2020 – s. 151A was inserted with effect from 01.11.2020, and s. 144B was inserted in the Act with effect from 01.04.2021. While s. 151A created the enabling power for faceless assessment of income escaping assessment, s. 144B supplied the statutory procedure for faceless assessment, reassessment and recomputation in specified cases.

Genesis of the JAO-FAO Controversy

S. 148A was inserted with effect from 01.04.2021. It brought in a four-step pre-notice procedure: before issuing a notice under s. 148 of the Act, the AO was required to conduct enquiry, if required, provide an opportunity of hearing, consider the assessee’s reply and pass an order deciding whether it was a fit case to issue notice under s. 148. The proviso to s. 148A also carved out certain exceptions where this pre-notice procedure would not apply. Correspondingly, s. 151A was amended to include s. 148A within the scheme-making power of the Central Government.

Then came the e-Assessment of Income Escaping Assessment Scheme, 2022. It provided that assessment, reassessment or recomputation under s. 147 of the Act and issuance of notice under s. 148 shall be through automated allocation, in accordance with CBDT’s risk management strategy referred to in s. 148, and in a faceless manner to the extent provided in s. 144B.

The JAO-FAO controversy appears to have arisen from the phrase ‘to the extent provided in s. 144B’. Assessees contended that notices under s. 148 and orders under s. 148A(d) could not be issued by the JAO once the faceless scheme applied. The Revenue maintained that the pre-notice stage remained with the JAO and that the scheme could not be read as disabling the jurisdictional officer from issuing notices or passing orders. High Courts were divided on this issue: some accepted concurrent or continuing JAO jurisdiction, while others quashed JAO-issued notices and orders.

Parliament’s Manoeuvre to Introduce S. 147A & the Supreme Court’s Order

While various appeals were pending before the Supreme Court, the Finance Bill, 2026 proposed a legislative clarification. The Memorandum described reassessment as a two-step procedure: the first step being the pre-notice procedure under s. 148A, and the second beginning once notice under s. 148 is issued, after which the case goes to the National Faceless Assessment Centre (‘NaFAC’) for faceless assessment under s. 144B. It stated that the Legislature intended to demarcate the pre-assessment enquiry process from the assessment stage.

The Finance Act, 2026 then inserted s. 147A in the Act with retrospective effect from 01.04.2021. The provision states that notwithstanding any judgment, order or decree of any court, or s. 151A or any scheme framed thereunder, the AO for ss. 148 and 148A shall mean, and shall always be deemed to have meant, an AO other than NaFAC or any assessment unit referred to in s. 144B(3).

In light of this amendment, the Supreme Court did not adjudicate the merits of the competing interpretations before it. It set aside the High Court judgments that were in favour of assesees on the limited ground that the statutory foundation had changed. The matters were remanded to the respective High Courts with a request to decide them preferably by 30.09.2026. Assessees were permitted to modify their writ petitions to challenge the validity of s. 147A, and the Supreme Court expressly left open the validity, scope, effect, retrospectivity and applicability of the amended provision. Further reassessment proceedings pursuant to the impugned notices were stayed during pendency before the High Courts, subject to such terms as may be imposed by them.

Thereafter, on 04.05.2026, a two-judge Bench comprising Hon’ble CJI Surya Kant and J. Joymalya Bagchi dealt with a separate batch of about 103 cases, described as ‘slightly different’ from the matters disposed of on 10.04.2026. Those cases had been segregated on the premise that they may pertain to assessment year (‘AY’) 2015-16. The Court recorded the Revenue’s concession that reassessment notices for AY 2015-16 would be barred by time in light of Rajeev Bansal. Accordingly, those matters were also remanded to the respective High Courts. The Court directed that if the matters pertained to AY 2015-16, the notices would be declared time-barred; if they pertained to other AYs, they would be dealt with in accordance with the order dated 10.04.2026.

What Was Decided, and What Was Not

The order dated 10.04.2026 does not hold that all JAO-issued s. 148 notices or s. 148A orders are valid. It does not uphold s. 147A. It does not decide whether a retrospective amendment can cure proceedings already quashed by High Courts. It also does not decide whether s. 147A is merely clarificatory or whether it substantively alters the legal position after courts had read the faceless scheme differently.

What the order does is recognize that Parliament has intervened while the dispute was pending. Since several High Courts had proceeded on the footing that the JAO lacked competence, the Supreme Court considered it appropriate that the High Courts reconsider the controversy in light of the new provision. The litigation has therefore moved from one question to another. The earlier question was: what did the faceless reassessment scheme cover? The new question is: how far can s. 147A go?

Conclusion

The present controversy shows how, in tax law, procedure can become jurisdiction. A scheme introduced to make assessment more accountable eventually raised a more basic question: who is the officer authorized by law to act? And no, the answer now is not limited to that provided in s. 120 of the Act.

For now, faceless reassessment remains less a settled destination and more a statutory map being redrawn in real time. S. 147A may have changed the immediate filed of contest, but it has not ended the contest; the validity of the provision still to stand the test of arguments from the opposition. Meanwhile, cases excluded from the faceless assessment regime navigate their own path through this controversy.

The faceless regime began as an administrative promise of efficiency, transparency and dynamism. Over time, that promise hardened into statutory procedure. Once the procedure becomes statutory, the question is no longer only whether the taxpayer suffered prejudice. It is whether the authority determining and imposing the liabilities on the average citizen was the authority named by law.

i ITO v. Tej Pratap Singh, [2026] 185 taxmann.com 1007 (SC)
ii Finance Act, 2026 (Act 4 of 2026), s. 9, inserting s. 147A in the Act with retrospective effect from 01.04.2021; corresponding amendment to s. 279 of the Income-tax Act, 2025
iii Finance Act, 2018 (No. 13 of 2018), dated 28.03.2018
iv CBDT Notification No. 61/2019, S.O. 3264(E), dated 12.09.2019
v CBDT Notification No. 60/2020, S.O. 2745(E), dated 13.08.2020
vi Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (No. 38 of 2020), dated 29.09.2020
vii Certain exclusions were carved out such as cases assigned to Central Charges and International Tax Charges were kept outside the ambit of faceless assessment vide CBDT Orders dated 31.03.2021 and 06.09.2021
viii Finance Act, 2021 (No. 13 of 2021), dated 28.03.2021
ix CBDT Notification No. 18/2022, S.O. 1466(E), dated 29.03.2022
x Memorandum to Finance Bill, 2026, Clauses 8 and 62
xi See Note ii
xii See Note i
xiii ITO v. Sai Kumar Mateti, [2026] 187 taxmann.com 225 (SC)
xiv UOI v. Rajeev Bansal, [2024] 167 taxmann.com 70 (SC)