s.144B — Faceless assessment
The procedure by which an assessment or reassessment is made through the National Faceless Assessment Centre, with a show cause notice for every prejudicial variation and a video hearing if the assessee asks for one.
Governs assessments for every tax year beginning before 1 April 2026, including proceedings for those years begun later (section 536(2)(c) of the Income-tax Act, 2025). The text in force is the one recast by the Finance Act, 2022 with effect from 1 April 2022; sub-section (9), the "non est" clause, was omitted by that Act with retrospective effect from 1 April 2021. The Finance Act, 2026 substituted "by way of an electronic communication" for "by affixing digital signature" in sub-section (6)(i)(b), with effect from 1 April 2022. For tax year 2026-27 onwards the counterpart is section 273 of the Income-tax Act, 2025 with Rule 176 of the Income-tax Rules, 2026.
Income-tax Act, 1961
s.144B
Income-tax Act, 2025
s.273
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 144B of the Income-tax Act, 1961 requires an assessment, reassessment or recomputation under section 143(3), section 144 or section 147, in the cases specified by the Board under sub-section (2), to be made in a faceless manner by the procedure in sub-section (1). The assessee deals only with the National Faceless Assessment Centre; the assessment unit that decides the case is not identified to him. Where a variation prejudicial to him is proposed, sub-section (1)(xii)(b) requires a show cause notice "stating the variations prejudicial to the interest of assessee". On that notice, and on nothing earlier, sub-section (6)(vii) lets him request a personal hearing, and under sub-section (6)(viii) the unit "shall allow such hearing", by video conferencing, "to the extent technologically feasible". The draft order is served only on an eligible assessee under section 144C (clause (xxi)); in any other case the unit passes the final order (clause (xxii)). Sub-section (8) permits a transfer of the case to the jurisdictional Assessing Officer "with the prior approval of the Board". The Supreme Court, in National Faceless Assessment Centre v. Automotive Manufacturers Private Limited (21 March 2023, para 4), on the earlier text of the section, described the show cause notice as "mandatorily required" and remanded the assessment for a fresh order (para 5). Sub-section (9), which declared an assessment in breach of the procedure to be non est, was omitted with retrospective effect from 1 April 2021. The counterpart in the Income-tax Act, 2025 is section 273, which keeps the Centre, the units and "an opportunity of being heard" in the Act and places the show cause notice and the video hearing in Rule 176 of the Income-tax Rules, 2026.
What the provision does
Makes the assessment faceless in the cases the Board specifies, routes every communication through the Centre, entitles the assessee to a show cause notice stating each prejudicial variation, and obliges the unit to allow a video hearing once it is requested after that notice. It does not fix a minimum time for the reply; the seven days come from the Department's standard operating procedure of 3 August 2022, which itself permits the period to be curtailed in view of the limitation date. On its text it requires the draft order to be served only on an eligible assessee (clauses (xxi) and (xxii)); whether an ordinary assessee is also entitled to it is open, the Kerala High Court having held that he is not. Since the omission of sub-section (9) it does not say that an assessment made in breach of the procedure is non est. It assigns nothing to the faceless units after completion: under clause (xxxi) the records go to the jurisdictional Assessing Officer. It does not reach the cases the Board has excepted, among them cases assigned to Central Charges and to International Tax Charges.
Threshold questions
- Whether the case is properly in the faceless stream, that is, not assigned to a Central Charge or an International Tax Charge, not a survey case, and not transferred under section 144B(8)
- Which text of the section applied on the date of the step complained of, the text in force from 1 April 2021 or the text in force from 1 April 2022
- Whether a show cause notice under section 144B(1)(xii)(b) was served, and whether it stated every variation that the final order makes
- Whether the time allowed for the reply was reasonable, and whether an extension was sought before the due date and dealt with
- Whether a personal hearing was requested after the show cause notice, by the portal button or in writing, and whether it was allowed
- Whether the assessee is an eligible assessee under section 144C, on whom the draft order must be served under clause (xxi)
- Whether the order was signed within the time allowed by section 153, whatever date is typed on it
In practice
The recurring disputes.
Whether the draft order must be served on an assessee who is not an eligible assessee
The assessee's case rests on the Supreme Court's orders of 21 March 2023, which speak of "a show cause notice with a draft Assessment Order" as mandatorily required without confining the words to any class of assessee, and on sub-section (6)(vii), which describes the occasion for a hearing as one where a variation is proposed "in the income or loss determination proposal or the draft order". The Revenue's case is the Kerala High Court's decision in Joint Commissioner of Income Tax v. Sujatha Revikumar (Division Bench, 27 March 2025). It held (para 6) that for an ordinary assessee "the draft assessment order has to be seen as merely an internal document", and presumed (para 7) that the assessees in the earlier decisions were eligible assessees. A single judge followed it in M/s. Noel Villas and Apartments v. The Assistant Commissioner of Income-tax (8 June 2026, para 13). The current text favours that reading: clause (xxi) requires service "in case of an eligible assessee", and clause (xxii) takes "any case other than that referred to in clause (xxi)" straight to the final order. The Supreme Court's orders are unreasoned on the point and were made on the earlier text; the Kerala Bench did not examine whether the assessees before the Supreme Court were eligible assessees. The firm's view is that the ordinary assessee has a right to a show cause notice stating every variation, not to the draft order, and that a challenge resting only on non-service of the draft order will fail. The point is open outside Kerala.
Whether a written request for a hearing is enough without the portal button
The assessee's case is Agrawal JMC Joint Venture v. Assistant / Joint / Deputy / Assistant Commissioner of Income Tax (Gujarat High Court, 11 October 2021). The request was made in a written communication which the Revenue admitted receiving; the Bench held (para 22) that "there was no earthly reason for it to have ignored it". Clause (vii) says only that the assessee "may request" and prescribes no form. The Revenue's case is that the decision was given on the earlier text and, in the Bench's own words, when the regime "had merely begun and there were many hiccups". Clause (iv) of sub-section (6) requires a response to be filed "through his registered account", and clause (viii) allows the hearing "in accordance with the procedure laid down by the Board". In Raja Reddy Sannareddy v. Assessment Unit, Income Tax Department, National Faceless Assessment Centre (Telangana High Court, 3 March 2026, para 9) and in Noel Villas (para 16) the unclicked "Seek Video Conferencing" button was recorded against the assessee. In neither had any request been made, so neither refuses relief to an assessee who asked in writing. The point is open on the current text. The firm's view is that a request shown to have reached the assessment unit is a request received under clause (viii), and that the request should in every case be made both ways.
Whether an order passed in breach of the procedure is void or only set aside to be made again
The assessee's case is that the show cause notice is "mandatorily required" in the Supreme Court's words, and that the Calcutta High Court in Magadh Sugar & Energy Limited v. Assessment Unit, Income Tax Department, National Faceless Assessment Centre (Division Bench, 16 November 2022, para 10) held an order passed without it, on the current text, to be "in violation of principles of natural justice and in violation of the statutory provision and therefore, non-est". The Revenue's case is that sub-section (9) has been omitted with retrospective effect from 1 April 2021, that the Allahabad High Court upheld the omission in Sapna Flour Mills Ltd. v. Union of India (9 December 2022), and that the Supreme Court itself remanded. The relief in Magadh Sugar was also a remand (para 11), and Sapna Flour Mills set the order aside for denial of the hearing while upholding the omission. Outright quashing has been confined to an order that was itself beyond limitation (Filmtec Solar Private Limited v. National Faceless Assessment Centre, Delhi, Gujarat High Court, 28 September 2026) and to a final order passed on an eligible assessee without a draft order under section 144C (Hansgrohe India Private Limited v. The Assessment Unit, Income Tax Department, Bombay High Court, 25 March 2026). What the omission does to decisions already given under sub-section (9) was left undecided by the Supreme Court on 21 March 2023.
How long the Department has to pass the fresh order after a set-aside
Section 153(6)(i) allows an assessment made to give effect to a finding or direction in an order of a court, in a proceeding otherwise than by way of appeal or reference under the Act, to be completed within twelve months from the end of the month in which the order is received by the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner. The Revenue's case is that a writ remand carries the time needed to comply and that the court's own date governs: the Gujarat High Court usually gives twelve weeks, and the Bombay High Court gave four months in Hero Products India Pvt Ltd v. National Faceless Assessment Centre (13 July 2026, para 13). The assessee's case is that limitation is statutory and a court cannot enlarge it. In Sun Pharmaceutical Industries Limited v. Deputy Commissioner of Income Tax (Gujarat High Court, 6 January 2026, para 16) a remand was refused because "the remand proceedings would be barred by the limitation as prescribed under Section 153(6)", though that was a case on section 144C after an order under section 263, not a writ remand under section 144B. None of the decisions that remand a faceless assessment for breach of natural justice discusses section 153. Whether a bare set-aside is a "finding or direction", and whether the court's date or the statutory date prevails where they differ, are open. The firm's view is that section 153 is the outer limit and the court's timetable operates inside it.
Whether breach of the standard operating procedure is fatal by itself
The assessee's case is that the Gujarat High Court has called the standard operating procedure mandatory: in Parmeshwar Trading Co. Shingala Pravinbhai Hardasbhai v. National Faceless Assessment Centre (20 January 2026, para 9) the authorities had "failed to follow the mandatory requirement of the Standard Operating Procedure", and B.M. Developers v. Assessment Unit Income Tax Department (17 April 2026, para 8) is in the same words. The procedure is laid down under sub-section (6)(xi) with the prior approval of the Board. The Revenue's case is that in both decisions the breach found was denial of a video hearing that had been requested, which sub-section (6)(viii) forbids without the procedure, and that the facts were not disputed. Neither judgment examines whether a procedure laid down under clause (xi) has the force of law, and the same document permits the seven days for a reply to be curtailed for limitation. The firm's view is that breach of a paragraph that has no counterpart in the section is not by itself fatal, and that the assessee should show what the departure cost him. The status of the procedure in a contested case is undecided.