Six Days Instead of Seven: Karnataka HC Sets Aside Faceless Assessment for Violating Natural Justice
When the SOP says “minimum 7 days”, giving only 6 days is not a harmless technicality
In tax proceedings, sometimes a dispute runs into crores of rupees.
And sometimes the entire assessment falls because the taxpayer was given one day less to respond.
That is exactly what happened in a recent decision of the Karnataka High Court in Sanjay Harichand Chugh v. Assessment Unit [2026] 185 taxmann.com 80 (Karnataka).
The issue was not whether the assessee had actually escaped tax.
It was not about a complicated interpretation of a deduction or exemption.
The immediate issue was much simpler:
The show-cause notice gave the assessee only six days to respond, whereas the applicable Faceless Assessment SOP required at least seven days.
The High Court treated this as a violation of natural justice and set aside the assessment and consequential orders.
One day.
One missing day.
And the assessment had to go back to the beginning of the final show-cause stage.
What happened?
The assessee was subjected to assessment proceedings under Section 143(3) read with Section 144B for AY 2022-23 under the faceless assessment regime.
During the proceedings, a show-cause notice was issued.
The assessee was required to respond within six days.
The assessment thereafter proceeded and an assessment order was passed.
Consequential computation sheets and demand notices followed.
Penalty proceedings/orders also followed.
The assessee even faced rejection of a rectification application under Section 154.
The assessee then approached the Karnataka High Court challenging the assessment and the consequential actions.
The argument was straightforward:
The opportunity granted to respond to the show-cause notice was itself contrary to the applicable Faceless Assessment SOP.
What did the SOP say?
The relevant provision was Clause N.1.3 of the Faceless Assessment Standard Operating Procedure.
It required that the assessee be given at least seven days to respond to the show-cause notice.
But the assessee received only six days.
The Department might be tempted to say:
“Come on, it is only one day!”
But that was not how the High Court approached it.
The issue was not whether six days is “almost” seven.
The issue was whether the prescribed minimum opportunity had been provided.
It had not.
Natural justice is not measured with a stopwatch
The principles of natural justice are built around a simple idea:
Before an adverse decision is taken, the affected person should have a reasonable opportunity to present his case.
In faceless assessment proceedings, the opportunity to respond is particularly important.
There is no physical hearing across a table where the taxpayer can explain:
“Sir, this document could not be uploaded yesterday because…”
Everything has to happen through the electronic proceedings.
The show-cause notice and the time allowed for response therefore become critical components of the taxpayer’s opportunity to defend the case.
If the Department’s own SOP prescribes a minimum period, that period cannot simply be shortened at convenience.
Six days is not seven days
This sounds almost like a school mathematics question.
But legally, the distinction was crucial.
If an instruction says:
“Give at least 7 days”
it does not mean:
“Give 6 days, provided the taxpayer probably had enough time.”
The word “at least” establishes a minimum.
The High Court therefore found that the six-day period was in clear violation of the applicable SOP.
And once the opportunity itself was defective, the assessment could not safely survive.
The consequences were much wider than the SCN
The High Court did not merely direct the Department to accept a belated reply.
It set aside the consequential proceedings as well.
The challenged proceedings included:
– Assessment order under Section 143(3) read with Section 144B;
– Consequential computation sheets;
– Demand notices;
– Penalty orders; and
– Order rejecting rectification under Section 154.
The matter was restored to the stage of reply to the show-cause notice.
That is significant.
The taxpayer was effectively given the opportunity that should have been available in the first place.
Faceless does not mean “opportunity-less”
The faceless assessment system was introduced to reduce physical interaction, improve transparency and bring greater standardisation to tax assessments.
But faceless assessment does not mean that the principles of natural justice disappear.
Quite the opposite.
When there is no physical hearing, procedural safeguards become even more important.
The taxpayer must be given:
– Proper notice;
– Relevant material relied upon;
– Adequate time to respond;
– Opportunity to rebut adverse material; and
– A meaningful opportunity before an adverse order is passed.
The computer may be faceless.
Natural justice cannot be faceless.
SOP: Merely administrative or legally relevant?
This is perhaps the most interesting aspect of the decision.
Standard Operating Procedures are often viewed as internal administrative instructions.
But where an SOP specifically prescribes the minimum period to be provided to a taxpayer and that period is directly connected with the opportunity to defend an assessment, violation of that requirement can have serious consequences.
The present case demonstrates that procedural instructions cannot necessarily be dismissed as irrelevant when their breach affects the taxpayer’s substantive opportunity of being heard.
Why this ruling matters to every taxpayer
Many taxpayers receive faceless notices and see a response deadline displayed on the portal.
The natural reaction is:
“I have been given some time, so I will manage.”
That approach can be dangerous.
The first step should be to check:
What period was actually granted?
If the prescribed minimum period has not been allowed, the taxpayer should immediately place an objection on record.
For example:
«“The show-cause notice grants only six days for response, whereas the applicable SOP prescribes a minimum of seven days. The assessee requests that the response time be suitably extended and reserves the right to raise the procedural violation.”
The objection should preferably be filed before the deadline expires.
Silence can make a later procedural challenge more difficult.»
What should professionals check in a faceless assessment?
A good tax professional should not look only at the proposed addition.
The process itself should be audited.
A practical checklist can include:
1. Date of notice
When was the notice actually issued?
2. Date of service
When did it become available/served on the assessee?
3. Response deadline
How many days were actually provided?
4. Applicable SOP
What minimum period was prescribed for that type of notice at the relevant time?
5. Material relied upon
Were all documents and information relied upon by the Department made available?
6. Opportunity to rebut
Was the assessee actually given a meaningful opportunity to respond?
7. Additional evidence
If additional evidence was filed, was it considered?
8. Final order
Does the assessment order deal with the material submissions made by the assessee?
These checks can sometimes reveal a procedural defect even before one gets into the merits.
“But the assessee could have replied in six days”
This is likely to be the first practical argument that comes to mind.
Suppose the taxpayer had enough documents and could have responded within six days.
Would that cure the defect?
The Karnataka High Court’s decision shows why the answer cannot simply be assumed to be yes.
Where the applicable SOP prescribed a minimum of seven days, the Department was required to comply with that prescribed opportunity.
Natural justice is not only about whether the taxpayer eventually managed to say something.
It is also about whether the procedure provided the legitimate opportunity promised by law/rules/SOP.
One day can matter in tax proceedings
Imagine receiving a show-cause notice asking you to explain:
– Several bank transactions;
– Multiple additions;
– Hundreds of pages of seized or third-party material;
– Capital-gain computations;
– TDS mismatches; and
– Various proposed disallowances.
The Department gives you seven days.
You plan to collect documents from your client, reconcile the accounts and prepare a detailed response.
Now imagine that the system gives you only six days.
That one day may mean:
– A document is not obtained;
– A reconciliation is incomplete;
– A professional cannot properly verify the figures;
– An affidavit cannot be prepared;
– Or a detailed legal response cannot be finalised.
The law therefore sensibly recognises that procedural time limits are not merely decorative.
But taxpayers should not misuse the ruling
The decision should also not be understood as giving taxpayers a licence to ignore notices.
The proper approach is not:
“I got six days instead of seven, so I will not reply at all.”
That can be risky.
The better approach is:
Object to the inadequate time and simultaneously seek reasonable extension, while making the best possible response within the time available.
Natural justice is strongest when the taxpayer demonstrates that he genuinely wanted to participate in the proceedings.
A useful weapon in faceless assessment
The ruling provides another important reminder for taxpayers and professionals:
Do not examine only the tax addition. Examine the procedure by which the addition was made.
A legally unsustainable addition is one possible ground of challenge.
But a denial of a meaningful opportunity to respond can be an equally important procedural ground.
In the present case, the High Court did not decide the underlying tax merits in favour of the assessee.
Instead, it restored the matter to the stage where the assessee should have received the proper opportunity to respond.
That distinction is important.
The larger lesson
Faceless assessment was designed to bring efficiency and consistency to tax administration.
But efficiency cannot come at the cost of fairness.
If the Department’s own procedure says minimum seven days, the taxpayer is entitled to that minimum opportunity.
Not six.
Not “almost seven”.
Seven.
And if the taxpayer is deprived of that opportunity, the resulting assessment can face judicial scrutiny.
The ruling therefore serves as a useful reminder to both sides:
For the Department — follow the prescribed procedure.
For the taxpayer — read the notice carefully and check whether the procedure has been followed.
For the tax professional — maintain a procedural timeline for every faceless assessment.
The message is simple
In faceless assessment, every day of the prescribed opportunity matters.
A six-day deadline may look like a small procedural irregularity.
But when the SOP requires a minimum of seven days, that one day can become the difference between an assessment surviving and an assessment being set aside.
So the next time a faceless show-cause notice arrives, don’t look only at “What addition is proposed?”
Also ask:
“How much time have I actually been given — and what does the SOP require?”
Because in tax litigation, sometimes the strongest ground is not what the Department added, but how the Department added it.
Case: Sanjay Harichand Chugh v. Assessment Unit
Citation: [2026] 185 taxmann.com 80 (Karnataka)
Date: 18 February 2026
Assessment Year: 2022-23
Key provision: Section 144B
Issue: Six days granted to respond to SCN against minimum seven days prescribed under applicable SOP
Decision: Assessment, demand, penalty and consequential orders set aside; matter restored to stage of reply to SCN.
The copy of the order is as under:
