Section 144 Best Judgment Assessment: How TaxBuddy Helps You After Ignored Income Tax Notices
- aakash nigam
- 2 days ago
- 8 min read
Section 144 of the Income Tax Act comes into play when notices are repeatedly ignored, allowing the Assessing Officer to estimate income and pass an ex-parte best judgment assessment. The outcome often involves inflated tax demands because the order relies on third-party data, past records, and the AO’s reasonable assumptions. Ignoring notices under Sections 142(1) or 143(2) increases the risk of receiving a Section 144 order, especially when material information is not furnished on time. Platforms like TaxBuddy assist taxpayers in identifying missed notices, validating timelines, and preparing structured responses that help reduce the impact of such assessments.
Table of Contents
Section 144 Best Judgment Assessment: Meaning and Purpose
Section 144 empowers the Assessing Officer to complete an assessment using the best possible estimate of income when a taxpayer fails to cooperate with statutory requirements. This provision exists to protect revenue interests when essential information is not provided despite repeated notices. The AO relies on available records such as bank activity, past returns, GST data, and third-party disclosures to form a reasonable estimate of income. Although the assessment is ex-parte, it must still reflect fairness, avoid arbitrary assumptions, and stay within the boundaries of the Act. Its core purpose is ensuring compliance even when taxpayers do not participate in the proceedings.
Triggers for Section 144 After Ignored Income Tax Notices
A Section 144 assessment begins when earlier notices remain unanswered. The most common triggers include failure to file a return after receiving a notice under Section 142(1), non-compliance with scrutiny requirements under Section 143(2), and withholding key documents requested by the AO. Repeated non-response amplifies the risk because the department then assumes the taxpayer is unwilling to cooperate. When information gaps persist for more than the stipulated timelines, the AO proceeds with the data already available. Ignored notices leave the AO with no choice but to rely on indirect indicators such as high-value transactions, AIS discrepancies, or mismatches between GST filings and reported income.
Process of Best Judgment Assessment Under Section 144
Before completing a best judgment assessment, the AO issues a show-cause notice, giving the taxpayer an opportunity to explain non-compliance. If the response is inadequate or not furnished within the timeline, the AO closes the process and drafts the assessment based on third-party data, previous years’ filings, and inferred income patterns. The final order typically includes estimated taxable income, interest under Sections 234A, 234B, and 234C, and potential penalty proceedings under Section 270A. The assessment is uploaded on the income tax portal, followed by intimation and demand notices. Even though the order is ex-parte, taxpayers retain the right to challenge it.
Consequences of Section 144 Orders
A Section 144 order can lead to significantly higher tax demands because it relies on estimates rather than accurate disclosures. Consequences may include inflated taxable income, additional interest, penalty exposure, and potential scrutiny for earlier years. In extreme cases, non-compliance may escalate into prosecution if willful concealment is suspected. Refunds may be withheld, refunds from future years may be adjusted, and bank accounts may face recovery actions if the demand remains unpaid. The long-term impact extends to increased compliance monitoring, making it crucial to act promptly once a Section 144 order is issued.
How Ignoring Income Tax Notices Leads to Section 144
Ignoring initial notices sets off a chain of events that eventually results in a best judgment assessment. The process usually begins with a notice under Section 142(1), asking for return filing or specific documents. If no response is provided, the AO then issues scrutiny notices seeking clarification on income sources and financial transactions. Continued silence creates an impression of concealment or non-cooperation, compelling the AO to use available information to complete the assessment. This data often comes from AIS,TDSreturns, property registries, bank statements, or GST returns, making non-response an expensive mistake.
How TaxBuddy Helps After Receiving a Section 144 Notice
TaxBuddy plays a crucial role in managing the aftermath of a Section 144 notice by dissecting the assessment order and pinpointing exactly where the AO may have relied on incomplete or incorrect information. The process begins with a detailed examination of AIS and TIS data to identify discrepancies between actual transactions and the figures considered by the AO. This helps establish whether the assessment was based on outdated filings, mismatched entries, or third-party data that does not truly reflect the taxpayer’s income.
The platform’s experts then evaluate the notices previously issued, the timelines involved, and any gaps that may have led to an ex-parte conclusion. This step is essential because many taxpayers remain unaware of missed communications on the e-filing portal. By reconstructing the sequence of events and identifying missed submissions, TaxBuddy provides clarity on what triggered the best judgment assessment and how it can be addressed.
Document preparation is another critical component of the support process. TaxBuddy guides users in collecting bank statements, invoices, deduction proofs, business records, investment documents, and any other materials relevant to correcting the estimated income. These documents are then organised into a structured presentation tailored to the AO’s requirements, ensuring that explanations are clear, concise, and supported by evidence.
Where the AO’s calculations contain evident errors, such as incorrect tax computations or misread entries in AIS, TaxBuddy helps draft rectification requests under Section 154. When the assessment involves deeper factual disagreements or requires reconsideration of estimated income, the team assists in preparing a comprehensive appeal to the Commissioner (Appeals). These submissions are built to meet procedural standards, including proper formatting, legal reasoning, and reference to supporting documents, reducing the likelihood of rejection due to technical deficiencies.
Throughout the process, TaxBuddy also monitors deadlines and department responses, ensuring that no further communication is missed. This continuous tracking prevents escalation into coercive recovery actions such as demand enforcement or bank account attachment. By offering end-to-end guidance, from initial evaluation to final submission, TaxBuddy helps transform a stressful ex-parte assessment into a manageable resolution pathway and restores accuracy to the taxpayer’s financial records.
Rectification, Revision, and Appeal Options After a Section 144 Order
After a Section 144 assessment, taxpayers have several remedies. A rectification request under Section 154 can correct apparent mistakes such as incorrect calculations or overlooked documents. If the assessment has significant issues, filing an appeal before the Commissioner (Appeals) under Section 246A allows the taxpayer to challenge the basis of the AO’s estimation. In situations where new information becomes available or timelines were missed due to reasonable causes, a revision petition under Section 264 may help secure relief. These remedies require properly compiled evidence and well-structured submissions to demonstrate inaccuracies in the AO’s judgment.
Preventing Section 144 Assessments Through Timely Compliance
Most Section 144 cases can be avoided through consistent compliance practices. Filing returns within deadlines, responding promptly to notices on the portal, verifying AIS details, and maintaining proper records minimise the chances of an ex-parte estimation. Taxpayers benefit from checking e-filing messages and email alerts regularly to ensure no communication goes unnoticed. Platforms like TaxBuddy help automate reminders, track pending actions, and detect discrepancies early, reducing notice-triggered risks. Timely compliance eliminates the need for best judgment assessments and keeps tax obligations predictable and manageable.
Conclusion
Section 144 assessments arise when repeated notices remain unanswered, compelling the AO to estimate income using indirect data sources. Their consequences can be substantial, but corrective steps such as rectification or appeal can bring outcomes back on track when handled efficiently. Support from experienced professionals ensures that submissions are complete, deadlines are met, and potential penalties are reduced. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides both self-filing and expert-assisted plans so taxpayers can choose based on the complexity of their case. Simple returns can be completed through the guided self-filing system, which auto-imports data, runs compliance checks, and highlights missing details. For issues like income tax notices, Section 144 best judgment assessments, mismatches, or multi-source income, expert-assisted plans ensure that trained professionals prepare and file the return, respond to notices, and manage follow-up queries from the department.
Q2. Which is the best site to file ITR?
The official Income Tax Department e-filing portal is widely used for filing returns. However, platforms that combine automation with expert review—such as TaxBuddy—offer a more comprehensive experience by identifying discrepancies, validating income sources, analysing AIS issues, and ensuring error-free filing. This reduces the risk of scrutiny notices and helps maintain compliance across financial years.
Q3. Where to file an income tax return?
ITRs can be filed through the Income Tax Department’s e-filing website or authorised private platforms such as TaxBuddy that simplify the process. These platforms allow uploading Form 16, importing AIS/TIS data automatically, checking for mismatches, and filing securely without navigating complex sections manually.
Q4. What should be done if a Section 144 notice appears on the income tax portal?
A Section 144 notice signals that the AO is preparing to complete an assessment without taxpayer participation. Immediate action is required: reviewing the notice, understanding what information was missed, and compiling documents requested earlier under Sections 142(1) or 143(2). Platforms like TaxBuddy assist by analysing timelines, drafting replies, uploading documentation, and managing communication with the AO to prevent an ex-parte order.
Q5. Can a Section 144 assessment be reversed or modified?
Yes. Section 144 orders can be corrected through a rectification request under Section 154 if there are clear errors such as incorrect calculations, overlooked documents, or factual mistakes. For deeper issues, an appeal before the Commissioner (Appeals) under Section 246A allows taxpayers to challenge the AO’s estimates with proper evidence. Timely action is crucial because appeal windows are limited.
Q6. What are the penalties associated with a Section 144 order?
Penalties may arise under Section 270A for under-reporting or misreporting of income. Interest under Sections 234A, 234B, and 234C also applies based on delayed or insufficient payments. In cases where non-compliance appears deliberate, further proceedings may be initiated. These consequences increase when the AO relies heavily on estimated income, making professional intervention essential.
Q7. How does ignoring notices under Section 142(1) lead to a best judgment assessment?
Section 142(1) notices request either return filing or documents required for assessment. If no response is submitted, the AO assumes that the taxpayer is withholding information and proceeds with available third-party data. Continuous silence after multiple reminders creates a clear pathway to a Section 144 order. Timely submissions prevent the AO from invoking this provision.
Q8. Is appeal the only remedy available after a Section 144 best judgment assessment?
Appeals are a primary remedy but not the only one. Taxpayers can seek rectification, apply for revision under Section 264, or respond with additional evidence if reasonable cause existed for earlier non-compliance. Each pathway serves a different purpose, and expert guidance helps identify which remedy aligns best with the taxpayer’s situation.
Q9. How can TaxBuddy help reduce a high tax demand raised under Section 144?
TaxBuddy’s experts review the AO’s estimations line-by-line and compare them with actual income, deductions, and eligible reliefs. By identifying errors, mismatches, and missing documents, the team prepares structured submissions for rectification or appeal. This can significantly reduce inflated tax demands based on unrealistic assumptions or incomplete data.
Q10. Can revised returns be filed after a Section 144 order?
Revised returns cannot be filed once an assessment order is passed. However, taxpayers may still correct errors through rectification or challenge the order through appeal. In certain cases, condonation requests may also be used to validate delayed submissions if reasonable cause for delay exists.
Q11. Does receiving a Section 144 notice affect future tax scrutiny?
Yes. Non-compliance that leads to a best judgment assessment often flags a taxpayer for enhanced monitoring in future years. The department may examine subsequent returns more closely. Ensuring accurate filings and timely responses going forward helps reduce this risk. Platforms like TaxBuddy support these compliance steps to avoid repeated scrutiny.
Q12. How can taxpayers avoid Section 144 assessments in the future?
Avoiding Section 144 requires consistent compliance—filing returns on time, checking the income tax portal regularly for notices, updating contact details, responding within deadlines, and maintaining proper records. Automated reminders and expert-guided review from platforms like TaxBuddy help prevent missed notices, ensuring that proceedings never escalate to a best judgment assessment.
