Best judgment assessments under Section 144 of the Income-tax Act, 1961 and Section 271 of the Income-tax Act, 2025, allow the tax administration to complete an assessment where a taxpayer fails to participate in the proceedings. While the provision ensures that the assessment process is not stalled by non-compliance, disputes arising from such assessments can continue through multiple levels of appeal, adding to costs, delays and uncertainty for both taxpayers and the tax administration.

This paper examines 181 Section 144 cases decided by the Mumbai, Delhi, Bangalore and Kolkata Benches of the Income Tax Appellate Tribunal (ITAT) between 2021 and 2025. It studies the circumstances in which best judgment assessments are made, the factors contributing to taxpayer non-participation, and the procedural and institutional issues that cause these disputes to arise and persist through the appellate process.

The analysis highlights a combination of taxpayer, administrative and systemic factors. Drawing on these patterns, the paper proposes a set of reforms aimed at reducing such preventable litigation, including safeguards for genuine hardship, opportunities to cure non-compliance before an assessment is finalised, better mechanisms for notice delivery, inclusion of digitally excluded taxpayer category , and stronger adjudication at the first appellate stage.