Section 144

What a section 144 notice is

Best Judgment / Ex-parte Assessment. Assessment completed without your input, on the officer's own estimate. It is a critical-severity notice in the assessment family under the Income Tax Act 1961.

If you ignore it: Order becomes final. Recovery follows.

Time to reply: this notice type carries no standard period. The date is printed on the notice itself and you must read it off the document. Route is appeal, not reply. Engine should surface the CIT(A) deadline instead.

Under the Income Tax Act 2025: section 271. But read that as reference, not as the provision to cite. Under s.536(2) of the 2025 Act, a proceeding for any tax year beginning before 1 April 2026 stays under the Income Tax Act 1961 from the notice through to the appeal — so a notice arriving today for an earlier year is a 1961 Act matter, whatever today's date is.

Section 144 — the law in short

What the courts have decided on section 144, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sasi Enterprises v ACIT Supreme CourtHelps department
  The firm never filed its returns and the assessments were made under s.144. Can we get the s.276CC complaint discharged because the assessment was still being fought?
  No. The Supreme Court held that the s.276CC offence is complete on the failure to furnish the return in due time and is unrelated to the pendency of the assessment. The proviso does not help unless the return was furnished before the end of the assessment year or the tax payable on the total income determined on regular assessment, less advance tax and TDS, is within the statutory figure — and by s.278E the court presumes the culpable mental state, leaving it to the accused to displace it beyond reasonable doubt.
• CIT v Chhabil Dass Agarwal Supreme CourtHelps department
  Can I go straight to the High Court against an income-tax order instead of filing the statutory appeal?
  Ordinarily no. The Supreme Court held that the Income-tax Act supplies a complete machinery for assessment and reassessment, and an assessee cannot abandon that machinery and invoke Article 226. The exceptions are narrow and have to be pleaded and made out — an order passed otherwise than in accordance with the enactment, in defiance of fundamental principles of judicial procedure, under repealed provisions, or in total violation of natural justice.
• Kalyan Kumar Ray v CIT Supreme CourtHelps department
  My assessment order does not compute the tax — the figures are only on the ITNS-150. Does that make the assessment bad?
  No, and the argument runs the other way from how it is often quoted. A three-Judge Bench rejected the submission that Form ITNS-150 is not part of the assessment order. The form is itself a form for determination of tax payable, and when signed or initialled by the officer it is an order in writing determining the tax within the meaning of s.143(3), to be treated as part of the assessment order in the wider sense. The assessee lost.
• Brij Bhushan Lal Parduman Kumar v CIT Supreme CourtHelps taxpayer
  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?
  No. The Supreme Court held that where the department supplies stores and materials to a works contractor at fixed rates solely for being used, fixed or incorporated in the works, and the surplus must be returned, there is not even a theoretical possibility of profit in the turnover those stores represent. So on a best judgment assessment the flat rate is to be applied only to the cash payments received from the department, exclusive of the cost of such stores. The Punjab and Haryana High Court's contrary view in Brij Bhushan Lal v CIT (Delhi) was held erroneous.
• CIT v Padamchand Ramgopal Supreme CourtHelps taxpayer
  The officer rejected my books without giving reasons and added half my interest receipts as concealed income for five years. Can he do that?
  No. The Supreme Court upheld the Calcutta High Court and held the additions bad. The officer gave no reason for rejecting the accounts. On appeal only two small errors were found, both in the first year, and nothing at all was found wrong with the accounts of the other four years. Adding half the gross interest receipts of each year as escaped income was, in the Court's words, arbitrary and the method highly capricious. Two insignificant mistakes in one year gave no basis for rejecting the books of the remaining years, and the Tribunal had simply adopted the first appellate authority's findings without examining the facts.
• State of Orissa v Maharaja Shri B.P. Singh Deo Supreme CourtHelps taxpayer
  The officer rejected my books and then simply picked a figure, and the appellate authority enhanced it without saying why. Can an estimate be made like that?
  No. The Supreme Court dismissed the State's appeals and upheld the Orissa High Court, which had set aside an enhancement made in a best judgment assessment. The Assistant Collector had found the assessee's material unreliable and had then enhanced the income without giving any reason and without disclosing the basis of the enhancement. The Court held that unreliability of the assessee's material does not empower the authorities to make an arbitrary order. The power to assess to the best of judgment is not an arbitrary power; the assessment must be based on some relevant material. The Tribunal had erred in affirming it without reasons.
• C. Vasantlal and Co v CIT Supreme CourtHelps department
  The Income-tax Officer examined witnesses behind my back and used their statements against me. Is that material evidence at all?
  It can be, provided it is disclosed to you. The Supreme Court held that the Income-tax Officer is not bound by the technical rules of the law of evidence and may collect material to facilitate assessment even by private enquiry, but if he wishes to use it he must inform the assessee of the material and give an adequate opportunity to explain it. Here nothing showed the material had been withheld, and in any event the Appellate Assistant Commissioner had summoned the two witnesses and allowed cross-examination. The Tribunal was therefore free to rely on their earlier statements and to disbelieve the later ones.
• Dhakeswari Cotton Mills v CIT Supreme CourtCuts both ways
  Can the Assessing Officer estimate income on departmental material the assessee has never been shown?
  The officer estimated gross profit by comparing the assessee with other mills, without disclosing the comparative data or letting the assessee lead rebuttal evidence. The Supreme Court set the assessment aside, holding that an estimate cannot rest on pure guess and that the material relied on must be disclosed to the assessee. It is the foundational Indian authority on natural justice at the assessment stage.
• Kachwala Gems v JCIT Supreme CourtCuts both ways
  Once the books are rightly rejected, how much guesswork is the Assessing Officer allowed in a best judgment assessment?
  The assessee's books were rejected for defects including the absence of a stock register and the income was estimated. The Supreme Court upheld the rejection and confirmed that some guesswork is inevitable in a best judgment assessment, but the estimate must be honest and must bear a reasonable nexus to the available material and the circumstances of the case.
• State of Kerala v C. Velukutty Supreme CourtCuts both ways
  What are the outer limits on a 'best of judgment' estimate, and can suppression found in one place be projected onto another?
  A suppression detected in the head office accounts was mechanically applied to estimate turnover of the branch. The Supreme Court held that the words 'best of his judgment' import limits: the estimate must be a judicial exercise, and although guesswork is involved it must not be a wild one and must have a reasonable nexus to the available material. It is the source of the 'guess but not a wild guess' formulation used throughout income-tax practice.
• BVR Projects v Assessment Unit High CourtHelps taxpayerValidity unconfirmed
  The faceless show-cause notice gave me four days to reply. Is that enough time?
  No. The CBDT's Standard Operating Procedure of 3 August 2022 for faceless assessment requires seven days to answer a show-cause notice. A notice issued on a Saturday with a deadline at 1.02 p.m. the following Friday gave four working days to respond to a proposed addition of over Rs. 5.22 crores, and the assessment order was set aside on that ground alone.
• PCIT v Kanak Impex (India) Ltd High CourtHelps department
  The officer says my purchases are accommodation entries. Can he add the whole purchase, or only a percentage?
  The whole of it, if you cannot show the purchases were real. The Bombay High Court set aside the Tribunal's order restricting the addition to a 12.5% profit estimate and restored the Assessing Officer's disallowance of the entire Rs 20.06 crore under s.69C, and the Supreme Court dismissed the assessee's SLP. The profit-element line only runs where the purchases themselves are accepted as having happened.
• Mantra Industries Ltd v NFAC High CourtHelps taxpayerSuperseded by amendment
  The faceless order says I filed no reply when I did, and my hearing request was ignored. Is it valid?
  It was set aside. The final order reproduced the draft order word for word apart from one sentence, recorded that no response had been filed when two replies were on the record, and ignored the requests for adjournment and personal hearing — so it was held non est under s.144B(9) as it then stood. The Court warned that costs would be recovered from the Assessing Officer personally and entered in the service record if it recurred.
• CIT v Y. Ramachandra Reddy High CourtHelps taxpayer
  The officer made a best judgment assessment and fixed my profit at a percentage of receipts. Does that wipe out my claim to depreciation and to interest?
  No. The High Court held that depreciation and interest, which are otherwise deductible in the ordinary course of assessment, keep the same legal character even where the profit is determined on a percentage basis. There was no reason to withhold from the assessee, merely because his profit had been estimated, a facility he would have had on a regular computation. The Revenue's appeal was dismissed. Note the boundary of this: the assessee's receipts were far above the s.44AD threshold, so s.44AD did not apply to him at all. Where income is actually returned under s.44AD, s.44AD(2) provides that deductions under ss.30 to 38 are deemed to have been given full effect, and depreciation under s.32 falls inside that range.
• CIT v Gian Chand Labour Contractors High CourtHelps department
  The officer rejected my books and applied a flat net profit rate. Can I still claim my freight and other expenses separately?
  No. Once the books are rejected and income is estimated by applying a net profit rate, that rate is taken to have already absorbed every deduction that would otherwise be computed under sections 30 to 43A. You cannot have the estimate and the expenses too.
• Awadhesh Pratap Singh Abdul Rehman v CIT High CourtHelps departmentValidity unconfirmed
  The officer rejected my books and made a best-judgment assessment because I kept no stock register. Is that enough on its own to reject?
  Not on its own — but it does not have to be. The absence of a stock register or cash memos may not by itself show that the accounts are false or incomplete; where it is coupled with unverifiable purchases and sales, missing vouchers for expenses and an implausibly low profit, the officer is justified in rejecting the books and assessing to the best of his judgment.
• ACIT v Serajuddin & Co High CourtCuts both ways
  What must an approval under s.153D actually show on its face, and does last-minute bulk approval survive?
  Draft search assessments were sent to the Additional CIT two days before limitation expired and approval issued with nothing to show the drafts had been read. The Orissa High Court held that while elaborate reasons are not required, there must be some indication that the approving authority examined the draft orders and found they met the requirements of law. The assessments were held invalid, and the Supreme Court later dismissed the Revenue's SLP.
• TSC Fashions Pvt Ltd v ITO ITATHelps departmentValidity unconfirmed
  My client missed the tax audit because the old auditor stopped cooperating. Is that a reasonable cause that kills the s.271B penalty?
  Not on assertion alone. The Tribunal confirmed the penalty because the assessee produced no correspondence, email, letter, complaint or affidavit against the earlier auditor, and showed no proactive steps of its own; a bald plea of auditor non-cooperation is a mere allegation and does not discharge the burden under s.273B.
• Santosh Kumar v ITO ITATHelps taxpayerValidity unconfirmed
  The AO has taxed my entire cash deposit as undisclosed income. Can he be made to tax only the presumptive percentage of it instead?
  Yes, where the deposits are the takings of an eligible business. The Tribunal deleted an addition of the whole Rs 25,56,700 deposited and substituted income of Rs 2,05,000, computed at 8% of those deposits under s.44AD, on the footing that the real income and not the entire receipt is what is taxable.
• Bright Singh Chelladurai v ITO ITATHelps taxpayerHigh Courts differ
  The officer penalised my client Rs 25,000 under s.271A for not keeping books and then another Rs 1,50,000 under s.271B for not getting them audited. Can he do both for the same year?
  No. Having levied the s.271A penalty for not maintaining books under s.44AA, the officer ought not to have levied a s.271B penalty as well — if no books were kept there was nothing to audit, so s.44AB was not violated. The Tribunal deleted the s.271B penalty and left the s.271A penalty standing.
• Net Agri Company Pvt Ltd v ITO ITATHelps taxpayer
  The Commissioner (Appeals) accepted my explanation for the investment but then made a fresh addition for cash deposits he spotted in my bank statement, without telling me. Can he do that?
  No. The Delhi Tribunal held that the Commissioner (Appeals) cannot determine taxability from a new source, and cannot enhance without show-causing the assessee. The Assessing Officer had added the investment in property as unexplained under section 69. Having accepted the evidence and deleted most of it, the Commissioner (Appeals) went on to tax cash deposits in the bank account used to repay the bridging loan, treating them as unexplained cash credits under section 68. That was a different exercise from the one the officer had done, it went beyond the Tribunal's earlier remand, and no notice was given. The addition of Rs 1,75,50,000 was deleted.
• Vatsalabai Karbhari Deore v ACIT ITATHelps taxpayerValidity unconfirmed
  You missed the notices and got a best judgment assessment. Is the officer's estimate final?
  Not if it is arbitrary. An 8% net profit estimate was set aside as lacking proper substantiation, and the matter was remanded so the audited books and supporting evidence could be produced.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.