This judgment does not decide the merits of the escaped-income allegations behind the reopenings, any assessment year other than those listed, or whether any fresh reassessment with a valid Section 143(2) notice would be within limitation. It decides only that these reassessment proceedings, framed without any Section 143(2) notice, are vitiated.
- Case
- Principal Commissioner of Income Tax, Bhubaneswar v. Orissa Mining Corporation Ltd.
- Court
- Supreme Court of India
- Decision
- Citation
- 2026 INSC 1171
- Bench
- Sanjay Kumar; Sanjeev Sachdeva
- Judgment by
- Sanjeev Sachdeva
- Case numbers
- Civil Appeal No. 13959 of 2026 (arising from SLP(C) No. 14546 of 2023); SLP(C) No. 25931 of 2026; SLP(C) No. 25932 of 2026; SLP(C) No. 3350 of 2024; SLP(C) No. 25882 of 2026
- Outcome
- Revenue appeals dismissed; the Tribunal's orders setting aside the reassessment orders, affirmed by the High Court of Orissa, stand. The reassessment proceedings are vitiated for want of a Section 143(2) notice.
Reassessment without a Section 143(2) notice is vitiated
The Supreme Court has held that the Income Tax Department cannot frame a reassessment under Section 143(3) read with Section 147 of the Income Tax Act, 1961 unless it has first issued a notice under Section 143(2). A taxpayer's mere participation in the reassessment proceedings does not confer that missing jurisdiction on the Assessing Officer.
Dismissing the Revenue's appeals in Principal Commissioner of Income Tax, Bhubaneswar v. Orissa Mining Corporation Ltd., the Court held: “The Assessing Officer cannot undertake the proceedings of reassessment under Section 143(3), read with Section 147 of the Act, unless a notice under Section 143(2) of the Act has been issued to the Assessee. Mere participation of the Assessee in the assessment proceedings, in the absence of a notice under Section 143(2) of the Act, does not confer jurisdiction on the Assessing Officer to frame an assessment under Section 143 (3) of the Act.”
The judgment, authored by Justice Sanjeev Sachdeva for a Bench also comprising Justice Sanjay Kumar, was pronounced on 28 October 2026. It upholds the Income Tax Appellate Tribunal's orders, affirmed by the High Court of Orissa, setting aside the reassessments for want of the Section 143(2) notice.
Original assessments reopened; no Section 143(2) notice followed
The batch of appeals concerned Orissa Mining Corporation Ltd., for Assessment Years 2008-09, 2010-11 and 2011-12, and Bijoy Kishore Mohanty, for Assessment Years 2009-10 and 2010-11. Both assessees had filed returns under Section 139, which were duly assessed under Section 143(3). The Revenue later sought to reopen those assessments under Section 147 and issued notices under Section 148 requiring returns in the prescribed form.
Orissa Mining Corporation asked that its return originally filed under Section 139 be treated as its return in response to the Section 148 notice; Mohanty refiled the same return. Admittedly, no notice under Section 143(2) was then issued. Instead, notices under Section 142(1) sought documents and stock information, and reassessment orders were framed.
The assessees challenged the orders before the Commissioner of Income Tax (Appeals), arguing that the failure to issue a Section 143(2) notice vitiated the proceedings. The appellate authority rejected that argument, reasoning that participation after the Section 148 and Section 142(1) notices barred the objection at the appellate stage. The Tribunal disagreed, holding the proceedings vitiated for want of the Section 143(2) notice, and set the reassessment orders aside; the High Court upheld the Tribunal. The lead matter arose from the High Court of Orissa's final judgment and order dated 25 February 2022 in ITA No. 20 of 2017.
Three questions on notice, participation and substitution
The Court framed three common questions of law. First, whether Section 292BB precludes an assessee from objecting to non-service of a Section 143(2) notice where the assessee appeared and cooperated in the reassessment proceedings without raising the objection. Second, whether an assessee who asks that its earlier Section 139 return be treated as its return in response to a Section 148 notice need not be given a Section 143(2) notice. Third, whether a letter from the Assessing Officer during reassessment, requiring the assessee to explain the grounds on which reassessment was proposed, amounts to sufficient compliance with Section 143(2).
The Court answered all three against the Revenue. Section 292BB does not preclude the objection where no notice was issued; the Revenue's obligation to serve a Section 143(2) notice survives a request to treat the earlier return as the Section 148 return; and a Section 142(1) letter does not satisfy the mandatory Section 143(2) obligation.
Section 143(2) is mandatory, not a curable irregularity
Section 143(2) requires the Assessing Officer, where it considers it necessary or expedient to ensure the assessee has not understated income, computed excessive loss or under-paid tax, to serve a notice requiring the assessee to attend or to produce evidence in support of the return. The Court stressed that the notice gives the assessee the opportunity to produce evidence or particulars on which relief is claimed, and called it a sine qua non for a reassessment proceeding under Section 147: without it, no further proceedings can be undertaken by the Revenue.
Relying on Assistant Commissioner of Income Tax v. Hotel Blue Moon, the Court held that the omission to issue a Section 143(2) notice cannot be treated as a procedural irregularity that is curable, and that the requirement cannot be dispensed with. An officer intending to make an enquiry must follow Sections 142 and 143(2) and 143(3) together.
Section 292BB cures defective service, not non-issuance
Section 292BB deems a notice duly served in time where the assessee has appeared in a proceeding or cooperated in an inquiry, and precludes objections that the notice was not served, not served in time, or served improperly. The Court held that this deeming fiction can come into play only if a notice is alleged to have been sent: it presupposes a notice whose service is infirm, and precludes objections about service, timely service and proper service.
Where, as here, the Revenue itself contends that no notice was sent, Section 292BB has no applicability. The Court put it plainly: the fiction cannot come into play where the Revenue has admittedly not even issued the notice. The same distinction appears in Commissioner of Income Tax v. Laxman Das Khandelwal, which the Court cited for the proposition that Section 292BB makes service with certain infirmities proper and valid on requisite participation, but does not save complete absence of notice.
Reusing the old return and the Section 142(1) letter do not help the Revenue
An assessee responding to a Section 148 notice may either file a fresh return or simply state that its earlier Section 139 return be treated as the return in response, remaining bound by it, without refiling a copy. The Court held that this choice does not dispense with the Revenue's obligation to issue a Section 143(2) notice requiring the assessee to produce evidence in support of that return.
Nor can a Section 142(1) letter fill the gap. Section 143(3) empowers assessment only after hearing evidence produced pursuant to a Section 143(2) notice, and a letter issued after proceedings have commenced cannot cover up the lacuna: as the Court put it, it “would not validate what is non est”. Finding no infirmity in the Tribunal's view as affirmed by the High Court, the Court dismissed the appeals, with pending applications disposed of.
BANTHRY ANALYSISFor law students: issued versus served
The judgment turns on a distinction students often blur: issuance versus service. Section 292BB is a service-curing provision. It assumes a notice exists and was sent, and stops a participating assessee from picking holes in how it reached them. It says nothing about a notice that was never issued at all, and the Court refuses to stretch a deeming fiction into a substitute for issuance.
The companion lesson is about jurisdiction versus procedure. A missing Section 143(2) notice is not a paperwork slip the Court will overlook because the assessee cooperated; it is the step that gives the officer power to frame the Section 143(3) assessment in the first place. That is why participation cannot cure it, why a Section 142(1) inquiry letter issued mid-stream cannot stand in for it, and why the reassessment orders fell in full rather than being sent back for a fresh notice.
READING PROMPTSQuestions for a closer reading
- Why does Section 292BB not save a reassessment where the Revenue admits it never issued a Section 143(2) notice, even though the assessee participated in the proceedings?
- How does the Court distinguish a notice that was served defectively from a notice that was never issued, and why does that distinction decide this case?
- If an assessee asks that its earlier Section 139 return be treated as its return in response to a Section 148 notice, what obligation does the Revenue still owe, and why does a Section 142(1) letter not discharge it?
