No Natural Justice Violation if Multiple Opportunities Given: Telangana HC

Raja Reddy Sannareddy Vs Assessment Unit (Telangana High Court)

Telangana High Court Upholds Faceless Assessment Framework Under Income Tax Act No Violation of Natural Justice Where Multiple Opportunities Were Granted

Introduction

The Telangana High Court in W.P. No. 6429 of 2026 – Raja Reddy Sannareddy v. Assessment Unit, Income Tax Department delivered an important ruling on the validity of faceless assessments under Section 144B of the Income Tax Act, 1961. The judgment reiterates that repeated non-compliance by the assessee cannot later be projected as denial of natural justice.

The Division Bench comprising the Hon’ble Chief Justice Sri Aparesh Kumar Singh and Hon’ble Sri Justice G.M. Mohiuddin dismissed the writ petition and upheld the assessment proceedings conducted under the National Faceless Assessment Centre (NFAC).

Background of the Case

The petitioner challenged the assessment order dated 03.02.2026 passed under Section 143(3) for AY 2024-25. The scrutiny was initiated under the CASS mechanism on the ground:

“Large Exemption under category others in schedule EI (Old Tax Regime).”

The petitioner alleged:

• Violation of principles of natural justice,
• Lack of adequate hearing opportunity,
• Failure to consider documents subsequently filed,
• Improper designation of the Assessing Officer in a faceless assessment system.

The petitioner also sought interim protection against the assessment order.

Timeline of Proceedings Considered by the Court

The Court examined the chronology of notices and responses:

The petitioner claimed inability to respond because of:

• Cardiac stent insertion,
• Eye surgery,
• Medical complications.

However, the Revenue demonstrated that:

• The petitioner had already been discharged from hospital much earlier,
• No response was filed within the prescribed time,
• No request for video conferencing was made on the designated date,
• The faceless assessment unit had statutory deadlines to complete the assessment.

Key Legal Issues Before the Court

The Court examined the following questions:

1. Whether principles of natural justice were violated?

2. Whether faceless assessment orders must disclose the name/designation of a specific Assessing Officer?

3. Whether repeated adjournments can invalidate assessment proceedings?

Court’s Findings

 Adequate Opportunity Was Granted

The Court held that sufficient opportunities had been provided to the assessee through multiple statutory notices.

The Bench observed that the petitioner himself failed to avail the opportunities offered, including the option of video conferencing under the faceless assessment scheme.

The Court specifically noted:

• The assessee repeatedly sought adjournments,
• Responses were not filed within stipulated timelines,
• The petitioner failed to utilize procedural safeguards available under Section 144B.

Accordingly, the allegation of breach of natural justice was rejected.

Faceless Assessment Mechanism Upheld

A major contention raised by the petitioner was that the assessment order merely referred to the “Assessment Unit” and not an individually designated Assessing Officer.

Rejecting this argument, the Court upheld the legality of the faceless assessment architecture under Section 144B and observed:

• The Assessment Unit itself functions as the statutory authority within the faceless scheme,
• Communications and orders are legally issued through the Assessment Unit,
• Digital authentication under the faceless regime satisfies statutory requirements.

The Court therefore held that absence of an individual officer’s designation does not invalidate the assessment.

Court’s Observations on Adjournments

The Bench made an important observation regarding repeated requests for adjournments in faceless proceedings.

The Court held:

• Assessment Units operate within strict statutory timelines,
• Adjournments cannot be granted routinely,
• Taxpayers must cooperate within prescribed schedules,
• Medical grounds unsupported by contemporaneous inability cannot indefinitely delay proceedings.

Reliance on Earlier Judgments

The petitioner relied upon:

• Tin Box Company v. CIT (2001) 9 SCC 725
• Chatursinh Javanji Chavda v. ACIT (Gujarat High Court)

However, the Telangana High Court distinguished those cases on facts, holding that in the present matter:

• Opportunities had indeed been granted,
• Notices were repeatedly issued,
• The assessee chose not to properly participate.

Final Decision

The Telangana High Court dismissed the writ petition and held that:

• No violation of natural justice was made out,
• Faceless assessment proceedings were valid,
• The petitioner had an effective alternate remedy of appeal.

The Court clarified that all grounds on merits could still be raised before the appellate authority.

Key Takeaways for Taxpayers

1. Faceless Assessments Have Strong Judicial Backing

Courts are increasingly recognizing the statutory validity of the faceless assessment ecosystem under Section 144B.

Challenges merely on procedural architecture are unlikely to succeed.

1. Non-Participation Weakens Natural Justice Arguments

Where notices are repeatedly issued, taxpayers cannot later allege denial of opportunity merely because they failed to respond in time.

3. Video Conferencing Opportunities Must Be Utilized

If the portal provides an option for video hearing, taxpayers should actively seek it wherever necessary.

Failure to do so may weaken future writ challenges.

4. Medical Grounds Must Be Properly Substantiated

Courts may scrutinize:

• Dates of hospitalization,
• Discharge summaries,
• Timing of notices,
• Actual incapacity to respond.

General medical claims may not justify prolonged non-compliance.

5. Writ Jurisdiction Is Limited When Alternate Remedy Exists

The judgment reiterates the settled principle that where appellate remedies are available, High Courts may decline interference unless there is:

• Patent lack of jurisdiction,
• Gross procedural illegality,
• Complete denial of opportunity.

Conclusion

This ruling is another significant precedent affirming the operational legitimacy of India’s faceless assessment framework. The Telangana High Court has clarified that taxpayers must actively participate in digital assessment proceedings and cannot later invoke natural justice principles after repeatedly ignoring statutory notices.

The decision also strengthens the Revenue’s position that faceless assessments issued through the “Assessment Unit” are legally sustainable even without naming a specific officer individually in the order.

For taxpayers and professionals, the judgment serves as a reminder that procedural diligence and timely compliance remain crucial in the era of digital tax administration.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Heard Mr. C.V.Narasimham, learned Senior Counsel representing Mr. Mohd. Mukhairuddin, learned counsel appearing for the petitioner, Ms. Bokaro Sapna Reddy, learned Senior Standing Counsel for Income Tax Department appearing for respondent No.1 and Mr. Pujlimamidi Shashidhar Reddy, learned counsel appearing for respondent No.2.

2. Petitioner seeks to challenge the assessment order dated 03.02.2026 having DIN No.ITBA/AST/S/144/2025-26/1085550778(1) passed by 1st respondent for assessment year 2024-25 as illegal, arbitrary and violative of principles of natural justice. Petitioner has also sought interim protection. The case of the petitioner was selected for scrutiny under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) under CASS scheme due to the following reason:

“1. Large Exemption under category others in schedule EI (Old Tax Regime).”

3. The details of opportunities granted to the petitioner at para 2 of the assessment order are extracted hereunder:

4. Petitioner sought an adjournment to the notice dated 03.09.2025 on health grounds. Petitioner was admitted in Medicover Hospital for stent insertion on 22.10.2025 that was followed by show cause notices dated 06.11.2025 and 17.12.2025 by the 1^st Petitioner contends that he had undergone eye surgery on 30.01.2026. Again on 02.02.2026, a request for adjournment was made informing medical ailments and medical reports were filed. On the same day, an e-mail acknowledgment was received from the Income Tax Department for the adjournment request dated 02.02.2026. On 04.02.2026 petitioner submitted written submissions and also copies of documents which are Annexures P-14 and P-15. However, the assessment order dated 03.02.2026 was passed and though issued on 06.02.2026 without considering the documents filed along with the reply dated 05.07.2026 and written submissions dated 04.02.2026. Therefore, there is a violation of principles of natural justice.

5. Learned counsel for the petitioner has also questioned the designation of the Assessing Officer in the assessment order which has been signed by the Assessment Unit, Income Tax Department and issued on 06.02.2026. Learned counsel for the petitioner has taken this Court to the provisions of Sections 2(7A), 120 and 144B of the Act in order to submit that even in case of a faceless assessment, the designation of the assessing authority ought to have been indicated, otherwise the whole exercise could be performed by anyone including a ministerial staff which raises questions on the whole exercise of assessment conducted in a faceless manner.

6. Learned counsel for the petitioner further relies upon the decision rendered by the Apex Court in the case of Tin Box Company, New Delhi v. CIT, New Delhi¹ in order to submit that the assessee should have been given a reasonable opportunity of setting out his case. He has also referred to the decision rendered by Gujarat High Court in the case of Chatursinh Javanji Chavda v. The Assistant Commissioner of Income Tax, Central Circle 1 (2)² wherein it was held that the Assessing Officer was obliged to consider the reply furnished by the assessee and pass an assessment order dealing with the objections raised by the assessee with regard to the additions proposed in the show cause notice, otherwise the framing of the assessment order would be futile exercise contrary to Section 144B of the Act. Therefore, the assessment order may be set aside.

7. Learned Senior Standing Counsel for Income Tax Department has drawn the attention of the Court to the details of opportunities granted in favour of the petitioner as reflected at para 2 of the assessment order. She has also taken this Court to the show cause notice dated 17.12.2025 as to why the proposed additions should not be made. She submits that the assessee did not submit his response through registered e-filing account by the designated hours on 28.12.2025. He also did not make any request to seek video conferencing on that day as required under the show cause notice. It is further pointed out from the discharge summary issued by Medicover Hospital at page 155 that the petitioner had been discharged on 24.10.2025 itself. Reference is also made to the letter of the Medicover Hospital. It is submitted that the Assessment Unit issues the order under the faceless scheme as prescribed under Section 144B of the Act. Reference is also made to the relevant provisions of Section 144B of the Act specially Sub-Sections (3), (4), (5) and (6) thereof in order to submit that it is the Assessment Unit through which any communication order both by the National Faceless Assessment Centre and Response by the assessee have to be submitted. It is submitted that the allegation that the order was antedated is no where made out as the cut-off date for passing the assessment order was much after 06.02.2026 when it was issued with a DIN number. Therefore, petitioner otherwise has an alternative remedy of appeal where all such documents and reply, if any, filed by the petitioner can be taken as a ground. Therefore, this Court may not interfere in the assessment order.

8. We have heard learned counsel for the parties at length and gone through the impugned assessment order. We have also taken note of the materials placed on record including the relevant provisions of the Income Tax Act, 1961 dealing with faceless assessment.

9. It appears from perusal of the assessment order that the show cause notice was issued on the petitioner asking as to why proposed variation should not be made on 17.12.2025. Instead of responding to the said notice by the designated date 28.12.2025, petitioner has been taking adjournments. Petitioner also did not click the Seek Video Conferencing button on 28.12.2025 for having an opportunity of hearing. In those circumstances, the Assessment Unit under the National Faceless Assessment Centre proceeded to pass the assessment order taking into consideration the summary of the information collected, Form 26AS, AIS and information available on the Insight Portal. Notices were also issued under Section 133(6) of the Act to the partnership firms wherein the assessee was a partner during the year under consideration to obtain documents relating to exempt income claim by the assessee.

10. We are, therefore, of the view that the contention of the petitioner that the assessment order was passed without proper opportunity to the petitioner is not made out. Petitioner himself has failed to avail the opportunity of personal hearing despite notices issued one after the other. In fact, the plea of medical grounds does not seem to be tenable as the petitioner was discharged as early as on 24.10.2025 whereas the notice for submitting his response was dated 17.12.2025. The Assessment Unit has a deadline to complete assessments. In such cases, therefore, request for repeated adjournments cannot be allowed in a routine manner. We are also of the opinion that in view of the Faceless Assessment Scheme under Section 144B of the Act, it is the Assessment Unit through which such notices, orders etc., are communicated to the assessee. The assessee is also required to submit its response to the Assessment Unit. Therefore, the plea raised by the petitioner that the assessment has not been conducted by the Proper Officer as it is not reflected in the assessment order dated 03.02.2026 digitally signed by the Assessment Unit cannot be accepted.

11. For all the above said reasons, this Court is, therefore, not inclined to interfere in the impugned assessment order. Petitioner has an efficacious alternative remedy of appeal where he is at liberty to raise all such grounds on merits and in law.

12. The instant Writ Petition is, accordingly, dismissed. There shall be no order as to costs.

Miscellaneous applications pending, if any, shall stand closed.

Notes:

¹ (2001) 9 SCC 725

² 2024 (6) TMI 692