Budget 2026: FM Proposes New Section 147A to Clarify Who Can Issue Reassessment Notices [Read Finance Bill 2026]

The Union Budget for the Financial Year 2026–27 was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha today (Sunday, 1 February 2026).

The Finance Bill, 2026 proposes the insertion of a new Section 147A in theIncome-tax Act, 1961 to clearly define who can act as the Assessing Officer for reassessment proceedings under Sections 148 and 148A.

As per the proposed provision, the term Assessing Officer, for the purpose of issuing reassessment notices and conducting related proceedings, will mean an officer other than the National Faceless Assessment Centre (NFAC) or any assessment unit referred to under Section 144B(3) of the Act.

The proposed section begins with a non-obstante clause, stating that it will apply notwithstanding any judgment, order or decree of any court, as well as notwithstanding Section 151A or any scheme framed under it. The government has stated that the amendment is introduced for the removal of doubts.

“After section 147 of the Income-tax Act, the following section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2021, namely:––

“147A. Notwithstanding anything contained in any judgement, order or decree of any court or in section 151A or in any scheme framed thereunder, for the removal of doubts, it is hereby clarified that the Assessing Officer for the purposes of sections 148 and 148A shall mean and shall always be deemed to have meant to be an Assessing Officer other than the National Faceless Assessment Centre or any assessment unit referred to in sub-section (3) of section 144B.”.

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Importantly, the new Section 147A is proposed to be deemed to have been inserted with effect from 1 April 2021, giving it retrospective application. This means the clarification will apply to reassessment proceedings initiated since that date.

The amendment seeks to provide statutory clarity on the authority responsible for reassessment actions, including the issuance of notices under Section 148 and the conduct of proceedings under Section 148A. By defining the role of the Assessing Officer in the law itself, the government aims to avoid disputes arising from differing interpretations of reassessment procedures.

The proposal forms part of a broader set of direct tax reforms in Budget 2026 that focus on reducing litigation, clarifying legal provisions, and strengthening tax administration. Other measures in the Budget also address procedural issues that have led to disputes in the past.

If enacted, the insertion of Section 147A will become a key provision governing reassessment proceedings under the Income-tax Act and will apply to both past and future cases falling within its scope.

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