Section 143(2) Notice Mandatory for Reassessment: SC Says Section 292BB Cannot Cure Its Absence

The Supreme Court has held a section 143(2) notice mandatory for reassessment under section 147 of the Income-tax Act, 1961, and ruled that its complete absence cannot be cured by section 292BB or by the assessee's participation. The judgment was delivered on 28 October 2026 in Principal Commissioner of Income Tax, Bhubaneshwar v. Orissa Mining Corporation Ltd., 2026 INSC 1171. A Bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva, with the judgment written by Justice Sachdeva, dismissed the Revenue's appeals and left intact the Tribunal's order setting aside the reassessments.

The ruling settles three questions that come up repeatedly in reopened cases: whether an assessee who attended the hearings can later object that no section 143(2) notice was issued, whether the Department can skip that notice when the assessee asks for its original return to be treated as the return filed in response to the section 148 notice, and whether a questionnaire under section 142(1) is enough. The Court answered all three against the Revenue.

Facts of the Orissa Mining Corporation and Bijoy Kishore Mohanty appeals

The lead matter arose from SLP (C) No. 14546 of 2023 and was heard with four connected petitions, SLP (C) Nos. 25931, 25932 and 25882 of 2026 and SLP (C) No. 3350 of 2024. Two assessees were involved: 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.

In each case the assessee had filed a return under section 139 and the Assessing Officer had completed a scrutiny assessment under section 143(3). The Department later reopened those assessments under section 147 and issued notices under section 148. Orissa Mining Corporation wrote to the Assessing Officer asking that its original return be treated as its return in response to the section 148 notice. Mr Mohanty filed his return again in response to the notice.

From that point the two cases ran the same way. No notice under section 143(2) was issued in any year. The Assessing Officer instead sent letters under section 142(1) calling for documents and stock details, and then passed reassessment orders. The assessees took the missing notice as a ground before the Commissioner of Income Tax (Appeals), who rejected it because they had taken part in the proceedings after receiving the section 148 and section 142(1) notices. The Income Tax Appellate Tribunal took the opposite view, held the proceedings vitiated and set the reassessment orders aside. The High Court upheld the Tribunal, and the Revenue came to the Supreme Court. Before the Supreme Court, the Revenue accepted that no section 143(2) notice had been issued for any of the years.

Why section 143(2) is a condition for jurisdiction in reassessment

The Court started from the scheme of sections 143(2) and 143(3). An assessment under section 143(3) is framed after hearing the evidence the assessee produces in response to a section 143(2) notice. Relying on Assistant Commissioner of Income Tax v. Hotel Blue Moon, (2010) 3 SCC 259, the Bench held that where the Assessing Officer intends to make an enquiry, he must follow sections 142, 143(2) and 143(3), and the omission to issue a section 143(2) notice is not a procedural irregularity that can be cured. The notice was described as a sine qua non for reassessment proceedings under section 147.

Since a reassessment framed under section 143(3) read with section 147 is still an assessment under section 143(3), the same requirement applies. Without the notice, the Court said, the Assessing Officer could not have framed the assessments, and the proceedings were vitiated.

Section 292BB covers defective service, not a notice that was never issued

The Revenue's main argument rested on section 292BB, which deems a notice to have been duly served in time where the assessee has appeared in the proceeding or co-operated in the inquiry, and bars the assessee from objecting that it was not served, not served in time or served improperly. Its proviso switches off the deeming where the assessee raised the objection before the assessment or reassessment was completed.

The Court read section 292BB as a deeming provision that operates only where the Revenue's own case is that a notice was sent. It can answer complaints about service, timing or manner. Where the Revenue itself says no notice was sent, there is nothing for the provision to deem served, and it has no application. The Bench drew support from Commissioner of Income Tax v. Laxman Das Khandelwal, (2021) 18 SCC 691, which had already drawn the same line: section 292BB saves defective service of an existing notice where the assessee participates, but it does not save the complete absence of a section 143(2) notice.

The practical consequence is the first answer in paragraph 23 of the judgment: an assessee is not barred from objecting to the non-issue of a section 143(2) notice merely because it participated in and co-operated with the reassessment without raising the point at that stage.

Treating the original return as the section 148 return does not dispense with the notice

Orissa Mining Corporation had not filed a fresh return; it had asked that its earlier section 139 return be treated as filed in response to the section 148 notice. The second question was whether that request made a section 143(2) notice unnecessary. The Court held it did not. An assessee is entitled to make that request instead of refiling, but the request does not relieve the Assessing Officer of the duty to issue a section 143(2) notice before framing the reassessment. The Mohanty appeals, where the return was refiled, went the same way.

A section 142(1) letter is not a substitute

The third question was whether the section 142(1) letters asking the assessees to explain the grounds of the proposed reassessment and to produce documents could stand in for the missing notice. The Bench held they could not. A letter issued after the reassessment proceedings have begun, the Court said, would not cover up the lacuna in the proceedings.

What the Orissa Mining ruling means for pending reassessment appeals

For anyone handling a reopened assessment under the Income-tax Act, 1961 that is still before the Commissioner (Appeals), the Tribunal or a High Court, the first file check is now simple: was a notice under section 143(2) issued after the return in response to the section 148 notice was filed or the original return was adopted? Neither a section 142(1) questionnaire nor attendance at hearings will fill that gap.

Where the notice is missing, the ground goes to the root of jurisdiction. In these appeals the point was argued before the first appellate authority after the reassessment orders were passed, and the Supreme Court still held for the assessees, because section 292BB never came into play once the Revenue conceded that no notice was sent. The ruling therefore supports raising the ground in pending appeals even where it was not taken during the assessment itself, as long as the record shows the notice was never issued.

The position is different where a notice was issued but its service is disputed. That is the territory section 292BB was written for, and an assessee who participated without objecting before completion of the reassessment will find the deeming fiction applied against it. The distinction the Court drew between non-issue and defective service makes the Department's record of whether a notice was issued at all the deciding evidence in such disputes.

For assessing officers, the judgment is a reminder that a reopened case needs the same procedural steps as an original scrutiny. Accepting a request to treat the earlier return as the section 148 return still has to be followed by a section 143(2) notice before any additions are made.

The judgment deals with reassessments for Assessment Years 2008-09 to 2011-12 and does not address whether the Department can begin fresh proceedings for those years after its reassessments fall, nor does it discuss the reassessment provisions of the Income-tax Act, 2025. Reopened cases from earlier years where the record shows no section 143(2) notice are the ones most directly affected.

Official source: View the official source document