No Section 143(2) notice, no reassessment: Supreme Court dismisses revenue appeals in Orissa Mining case

Justice Sanjay Kumar and Justice Sanjeev Sachdeva hold that Section 292BB cannot cure a notice that was never issued, and that a Section 142(1) letter during reassessment is no substitute for the mandatory Section 143(2) notice.

A taxpayer who shows up, answers every query and never complains during a reassessment can still have the whole exercise struck down afterwards if the assessing officer skipped the notice under Section 143(2) of the Income Tax Act, 1961. The Supreme Court on 28 October 2026 dismissed a batch of five appeals by the Principal Commissioner of Income Tax, Bhubaneshwar, against Orissa Mining Corporation Ltd. and an individual assessee, Bijoy Kishore Mohanty, holding that the reassessments framed against them without that notice were vitiated. The department had argued that Section 292BB, the deeming provision that bars an assessee who has participated in proceedings from objecting to how a notice was served, closed the door on the objection. A bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva held that the provision cures defects in service, not the complete absence of a notice, and cannot come into play where the revenue itself admits that nothing was ever issued.

The judgment, written by Justice Sachdeva and marked reportable, affirms a line of decisions from the Income Tax Appellate Tribunal and the High Court that had set the reassessment orders aside. It answers three questions of law the department had framed, and answers all three against the revenue.

Returns reiterated, queries answered, notice never sent

The facts in each appeal followed the same pattern. The assessees had filed returns under Section 139 for the relevant years, and those returns had been assessed with orders passed under Section 143(3). For Orissa Mining Corporation the years in question were Assessment Years 2008-09, 2010-11 and 2011-12; for Mohanty they were 2009-10 and 2010-11. The department later decided to reopen the assessments under Section 147 and issued notices under Section 148 requiring fresh returns in the prescribed form.

Neither assessee filed anything new. Orissa Mining Corporation wrote back asking that its original Section 139 return be treated as its return in response to the Section 148 notice. Mohanty refiled the same return he had filed earlier. From that point, it is common ground that no notice under Section 143(2) was ever issued. The officers went straight to notices under Section 142(1), calling for documents and stock information, and then framed reassessment orders against both assessees.

The assessees appealed to the Commissioner of Income Tax (Appeals), and one of their grounds was that the failure to issue a Section 143(2) notice vitiated the entire proceedings. The Commissioner (Appeals) rejected that ground. Since the assessees had participated in the proceedings after the Section 148 notice and the Section 142(1) notice that followed, the Commissioner reasoned, they could not be allowed to raise the omission at the appellate stage. The Tribunal disagreed in each case, held that the proceedings stood vitiated for want of the notice, and set the reassessment orders aside. The High Court dismissed the department’s challenges and confirmed that the assessments were vitiated. The Principal Commissioner then came to the Supreme Court, where the lead appeal arose from Special Leave Petition (C) No. 14546 of 2023 and the connected matters from four further petitions filed in 2024 and 2026.

Three questions the department wanted answered

The Court recorded the common questions in the department’s own terms. First, whether Section 292BB precludes an assessee from objecting in any proceeding to non-service of a Section 143(2) notice, if the assessee appeared and cooperated during the reassessment and raised no objection at the time. Second, whether an assessee who asks that an earlier Section 139 return be treated as the return filed in response to a Section 148 notice need not be given a Section 143(2) notice at all. Third, whether a letter from the assessing officer during the reassessment, requiring the assessee to explain the grounds on which reassessment was proposed, amounts to sufficient compliance with Section 143(2).

The department’s position, as the judgment records it, was that a Section 143(2) notice was not required in these circumstances and that the failure to issue one was not fatal to the reassessment. The weight of that argument rested on Section 292BB.

What Section 143(2) requires and why Hotel Blue Moon makes it mandatory

Justice Sachdeva began with the text. Section 143(2) provides that where a return has been furnished under Section 139 or in response to a Section 142(1) notice, the assessing officer, if he considers it necessary or expedient to ensure that the assessee has not understated income, computed excessive loss or underpaid tax, shall serve a notice requiring the assessee to attend or to produce any evidence on which he relies in support of the return. The proviso bars service of such a notice after three months from the end of the financial year in which the return is furnished. Section 143(3) then empowers the officer, on the date fixed in that notice or as soon afterwards as may be, to hear the evidence the assessee produces and the further evidence the officer requires on specified points, and to make the assessment by a written order.

The provision, the Court said, mandates service of the notice. It then applied Assistant Commissioner of Income Tax v. Hotel Blue Moon, reported at (2010) 3 SCC 259, which held that the omission to issue a Section 143(2) notice is not a procedural irregularity that can be cured, so the requirement cannot be dispensed with. Hotel Blue Moon had laid down that where the assessing officer intends to make an enquiry, he must necessarily follow Sections 142, 143(2) and 143(3). The notice is mandatory because it is what gives the assessee the opportunity to produce the evidence and particulars on which he claims relief. A Section 143(2) notice, the Court held, is a sine qua non for a reassessment under Section 147, and in its absence no further proceedings can be undertaken by the revenue.

Section 292BB cures bad service, not no service

The department’s answer was Section 292BB. The provision says that where an assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, any notice required to be served on him under the Act shall be deemed to have been duly served in time and in accordance with the Act, and the assessee is precluded from objecting that the notice was not served, was not served in time, or was served in an improper manner. The proviso excludes cases where the assessee raised the objection before the assessment or reassessment was completed.

The Court read the provision as creating a deeming fiction about service. It precludes objections about service, timely service and proper service of a notice that is required to be served. But the fiction, Justice Sachdeva wrote, “can come into play only if notice is alleged to have been sent” by the revenue. Only when the department contends that a notice as required under the Act was sent does the assessee who participated afterwards lose the right to say it never reached him, reached him late or reached him improperly. Where the revenue itself admits that no notice was issued at all, Section 292BB has no application.

From that reading the Court drew the jurisdictional consequence. An assessing officer cannot undertake reassessment under Section 143(3) read with Section 147 unless a Section 143(2) notice has been issued, and the assessee’s participation in the proceedings, without that notice, does not confer jurisdiction on the officer to frame an assessment under Section 143(3). The Court relied on Commissioner of Income Tax v. Laxman Das Khandelwal, reported at (2021) 18 SCC 691, which had already held that the scope of Section 292BB is to make service of a notice with certain infirmities proper and valid if the assessee participated, and that it does not save a complete absence of notice. Non-issuance of a Section 143(2) notice, on that authority, makes the entire proceedings invalid.

Reiterating an old return does not waive the notice

The second question concerned what happens when the assessee, instead of filing a fresh return in response to the Section 148 notice, simply points to the one already on file. The Court held that the assessee has a choice. He may file a fresh return. If he does not wish to, and wants to rely on the return filed earlier under Section 139, it is open to him to state in response to the Section 148 notice that the earlier return be treated as his return in response, and he remains bound by it. There is no need to refile a copy of the earlier return. Both assessees here had chosen that route and reiterated the returns already filed.

That choice, the Court held, did not relieve the revenue of anything. The obligation to issue a Section 143(2) notice, requiring the assessee to produce the evidence he relies on in support of the return, cannot be dispensed with merely because the return relied on is an old one. Section 143(3), the Court noted, empowers the officer to make an assessment only after hearing the evidence the assessee produces and the evidence the officer requires on specified points, and both of those flow from the notice issued under Section 143(2).

A Section 142(1) letter cannot cover the gap

The third question was whether the Section 142(1) communications the officers did send could do the work of the missing notice. Section 142(1), set out in a footnote to the judgment, lets the officer serve a notice on a person who has filed a return, or whose time to file has expired, requiring him to produce accounts or documents or to furnish information in writing, including a statement of assets and liabilities. The officers here had used it to call for documents and stock information during the reassessment.

The Court held that a letter issued by the assessing officer under Section 142(1) in the course of reassessment would not satisfy the requirements of Section 143(2). The Section 143(2) notice is a sine qua non for commencing the proceedings; a letter issued after the proceedings have commenced cannot cover up the lacuna and “would not validate what is non est”. The question as framed by the department, which asked whether a letter requiring the assessee to explain the grounds for the proposed reassessment was sufficient compliance, was answered in the negative on the same reasoning.

Order

The Court found no infirmity in the Tribunal’s view as affirmed by the High Court, and answered the three questions of law as follows. Section 292BB does not preclude an assessee from objecting, in any proceeding under the Act, to the non-issuance of a Section 143(2) notice merely because the assessee appeared and cooperated during the reassessment without raising the objection at the time. The revenue is not absolved of its obligation to serve a Section 143(2) notice even where the assessee asks that the earlier Section 139 return be treated as the return filed in response to the Section 148 notice. And the mere issuance of a letter under Section 142(1) during reassessment, requiring the assessee to explain the grounds on which reassessment was proposed, does not amount to sufficient compliance with the mandatory obligation to serve a Section 143(2) notice.

Finding no merit in the appeals, the Court dismissed all five. The reassessment orders against Orissa Mining Corporation for AY 2008-09, 2010-11 and 2011-12, and against Bijoy Kishore Mohanty for AY 2009-10 and 2010-11, remain set aside as the Tribunal and the High Court had ordered.