Section 144B routes scrutiny and best judgment assessments through the National Faceless Assessment Centre, which allocates the case to an assessment unit and can call on verification, technical and review units. Before any variation prejudicial to you, a show cause notice must issue, and since the Finance Act 2022 a request for a personal hearing by video conference must be allowed. A breach no longer makes the order automatically void — sub-section (9) was omitted retrospectively from 1 April 2021 — so the remedy is a writ on natural justice grounds.
The machinery. The National Faceless Assessment Centre (NaFAC) is the single point of contact. It issues every notice and receives every reply electronically. It allocates the case through an automated system to an assessment unit, which identifies the issues, seeks information and analyses your material. A verification unit does enquiry, cross-verification and examination of books or witnesses. A technical unit supplies legal, accounting, forensic, IT, valuation and transfer pricing assistance. A review unit checks that the evidence is complete, the points of fact and law are covered, and the arithmetic is right.
The sequence. Notice under s.143(2) or s.142(1) through NaFAC; your responses; requests by the assessment unit for verification or technical assistance; an income or loss determination proposal by the assessment unit; optional reference to a review unit, whose suggested variations go to a different assessment unit; then, if a variation prejudicial to you is proposed, a show cause notice; your reply; and the final order communicated by NaFAC.
The show cause stage is the one that matters. Section 144B requires that where any variation prejudicial to your interest is proposed, you be served a notice calling on you to show cause why the variation should not be made, on or before a specified date and time. Everything you want on the record has to go in there, because there is no oral hearing unless you ask.
Personal hearing. In the 2021 version, sub-section (6) allowed a request for personal hearing which the Chief Commissioner or Director General in charge of the Regional Faceless Assessment Centre could approve. The Finance Act 2022 changed 'may approve' to a mandate: where a request for personal hearing has been received, the income-tax authority of the relevant unit shall allow the hearing, conducted exclusively through video conferencing or video telephony to the extent technologically feasible. The Madras High Court in Venkateshwara Jewellery v. Assessment Unit held that the word 'shall' makes it mandatory, set aside the assessment order and directed a fresh order within three months after a video hearing.
Even before that amendment, the Delhi High Court in Sanjay Aggarwal v. National Faceless Assessment Centre set aside an assessment where the assessee had repeatedly asked for a hearing after a show cause proposing a large enhancement and none was given.
What a violation does now. Sub-section (9) used to say that an assessment not made in accordance with the procedure laid down in the section shall be non est. The Finance Act 2022 omitted it, and it is deemed to have been omitted with effect from 1 April 2021. The Allahabad High Court in Sapna Flour Mills Ltd v. Union of India held the retrospective omission constitutional, reasoning that the sub-section was procedural and that other safeguards, including hearing on request without prior approval, had been introduced.
So a breach does not automatically void the order. What survives is the ordinary law: an order passed without a show cause notice, or without disclosing the material relied on, or after refusing a requested video hearing, is liable to be set aside for breach of natural justice, usually in a writ petition, with the matter remanded rather than the addition deleted.
Because the remedy has shifted. Before 2022 you could plead the order was non est. Now you have to build a natural justice case: what you asked for, when, and what was denied. That case is made or lost by the paper trail on the portal. And a remand is a second round of the same assessment, not a win — so the substantive reply at show cause stage still has to be complete.
We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
The only thing behind my reopening notice is the Valuation Officer's report. Is that enough?
My return was only processed under 143(1). Does that stop the department reopening it later?
I made unexplained investments after the close of my accounting year. Which year can the officer tax them in, and can he reopen an earlier year to do it?
I am an MES contractor and the department supplies me cement and steel at fixed rates. The Income-tax Officer added the value of that material to my cash receipts before applying a flat rate. Can he?
The Income-tax Officer examined witnesses behind my back and used their statements against me. Is that material evidence at all?
How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
The sanctioning authority just wrote 'yes' and signed. Is that a sanction?
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