Telangana High Court quashes Rs 2,526 crore faceless assessment over Section 144B violation

The Telangana High Court reviewed a writ petition challenging a high-value income tax assessment order amounting to Rs 2,526 crore issued under the faceless assessment regime. The court investigated whether tax authorities complied with the mandatory procedural requirements outlined in Section 144B of the Income Tax Act. The faceless assessment scheme was introduced to bring transparency, eliminate physical interface, and ensure fair play through automated allocation and review mechanisms.

Statutory provisions mandate that revenue authorities must grant adequate opportunities for response, including video conferencing where requested, before finalizing adverse assessments. The court ruled that bypassing these statutory steps invalidates the resulting tax demand, protecting taxpayers from arbitrary administrative overreach. CAs and tax litigators must carefully audit faceless assessment notices to verify whether tax authorities followed every step stipulated in Section 144B.

When procedural violations occur, filing writ petitions in high courts offers an effective remedy to set aside exorbitant and flawed tax demands. Ensuring rigorous compliance with administrative rules remains essential for maintaining fairness in tax adjudication.