Supreme Court on Section 143(2): Participation Cannot Cure Complete Absence of Mandatory Notice

 

 

No Notice under Section 143(2)? Reassessment Proceedings Can Fall Apart

A taxpayer may cooperate with the Assessing Officer, respond to notices under Section 142(1), submit documents and explanations, and participate fully in reassessment proceedings. But can such participation cure the complete absence of a mandatory notice under Section 143(2) of the Income-tax Act, 1961?

The Supreme Court has now answered this question decisively.

In its landmark judgment dated 28 October 2026, in Principal Commissioner of Income Tax, Bhubaneswar v. Orissa Mining Corporation Ltd. & Ors. [2026 INSC 1171], the Supreme Court held that Section 292BB cannot cure the complete non-issuance of a notice under Section 143(2). Mere participation by the assessee in reassessment proceedings does not confer jurisdiction upon the Assessing Officer to frame an assessment under Section 143(3) read with Section 147.

The judgment is significant because it draws a clear distinction between a defect in service of a notice and the complete absence of the notice itself.

The Issue Before the Supreme Court

The appeals before the Supreme Court involved reassessment proceedings where the assessees had originally filed their returns under Section 139. Those returns had been assessed under Section 143(3).

Subsequently, the assessments were reopened under Section 147 and notices under Section 148 were issued.

In response to the notices under Section 148, the assessees either requested that their original returns filed under Section 139 be treated as returns filed in response to Section 148 notices, or reiterated the returns already filed.

Thereafter, the Assessing Officers issued notices under Section 142(1), seeking information and documents.

However, no notice under Section 143(2) was issued.

The reassessment orders were nevertheless completed. The assessees challenged the validity of the proceedings, contending that the absence of a notice under Section 143(2) was fatal to the reassessment.

The Income Tax Appellate Tribunal accepted the contention and held that the reassessment proceedings were vitiated for want of notice under Section 143(2). The High Court upheld the Tribunal’s decision.

The Revenue thereafter approached the Supreme Court.

What Does Section 143(2) Do?

Section 143(2) provides the statutory mechanism through which the Assessing Officer requires an assessee to attend or produce evidence in support of the return where the Assessing Officer considers it necessary or expedient to ensure that income has not been understated, loss has not been excessively computed or tax has not been underpaid.

The Supreme Court emphasised that the provision is not merely a procedural formality.

Relying upon its earlier decision in Assistant Commissioner of Income Tax v. Hotel Blue Moon (2010) 3 SCC 259, the Court reiterated that the omission to issue a notice under Section 143(2) cannot be treated as a curable procedural irregularity.

In other words, where the law mandates a notice, the Assessing Officer cannot simply proceed with the assessment as though the notice had been issued.

Section 143(2) Is the Sine Qua Non of Reassessment

The Supreme Court went a step further and described the notice under Section 143(2) as a “sine qua non” for reassessment proceedings under Section 147.

The Court held that where the Assessing Officer intends to make an enquiry, the statutory scheme involving Sections 142, 143(2) and 143(3) has to be followed.

A notice under Section 143(2) gives the assessee an opportunity to produce evidence and particulars supporting the return.

Therefore, in the absence of such notice, further proceedings cannot validly culminate in an assessment under Section 143(3).

Can Section 292BB Save the Assessment?

This was perhaps the most important question before the Supreme Court.

Section 292BB creates a deeming fiction in cases where an assessee has appeared in proceedings or cooperated in an inquiry relating to assessment or reassessment.

Broadly, where the statutory conditions are satisfied, the assessee may be precluded from objecting that a notice was:

– not served;

– not served in time; or

– served in an improper manner.

The Revenue argued that since the assessees had participated in the reassessment proceedings, Section 292BB should prevent them from challenging the absence of the Section 143(2) notice.

The Supreme Court rejected this argument.

The crucial distinction: “defective service” versus “no notice”

The Court explained that Section 292BB operates where a notice has been issued or sent by the Revenue, but the assessee subsequently raises an objection relating to its service.

It can address defects concerning:

Service — Timing of service — Manner of service

But the deeming fiction cannot be invoked where the Revenue itself admits that the notice was never issued.

The Court categorically held that Section 292BB cannot create a notice where none existed in the first place.

This distinction is extremely important for reassessment litigation.

Participation Does Not Confer Jurisdiction

One of the strongest observations of the Supreme Court is that mere participation by the assessee cannot confer jurisdiction on the Assessing Officer.

An assessee may have responded to notices under Section 142(1), furnished documents, appeared before the Assessing Officer and cooperated throughout the proceedings.

Yet, if the mandatory Section 143(2) notice was never issued, such participation does not validate the assessment.

The Supreme Court expressly held that mere participation, in the absence of a Section 143(2) notice, does not confer jurisdiction upon the Assessing Officer to frame an assessment under Section 143(3).

This principle provides an important protection against the argument that “the assessee participated, therefore the defect is cured.”

What If the Original Return Is Adopted?

Another important issue concerned a common situation in reassessment proceedings.

When an assessee receives a notice under Section 148, the assessee may choose not to file a fresh return and instead request that the original return filed under Section 139 be treated as the return filed in response to the Section 148 notice.

Does this eliminate the requirement of Section 143(2)?

The Supreme Court’s answer is No.

The Court held that an assessee can choose to rely upon the earlier return. It is not necessary to file a duplicate copy of that return merely because proceedings under Section 148 have commenced.

However, once that return is treated as the return in response to Section 148, the Revenue’s obligation to issue the statutory notice under Section 143(2) does not disappear.

Thus:

Original return adopted in response to Section 148 ≠ waiver of Section 143(2).

Can a Section 142(1) Notice Substitute Section 143(2)?

This is another practical issue addressed by the judgment.

In the cases before the Supreme Court, the Assessing Officers had issued notices under Section 142(1), requiring the assessees to furnish information and documents.

The Revenue sought to rely upon these notices as sufficient compliance with the assessment procedure.

The Supreme Court rejected the argument.

A notice under Section 142(1) serves a different statutory purpose. A letter issued during reassessment proceedings requiring the assessee to explain the grounds on which reassessment is proposed cannot substitute the mandatory notice under Section 143(2).

The Court made it clear that a letter issued after commencement of proceedings cannot fill the statutory lacuna caused by non-issuance of the mandatory notice.

Supreme Court’s Three Clear Answers

The Supreme Court ultimately answered the questions of law in favour of the assessees.

1.  Section 292BB does not cure non-issuance

An assessee can challenge the non-issuance of a Section 143(2) notice even if the assessee participated and cooperated in reassessment proceedings without raising an objection at that stage.

2.  Adoption of the original return does not dispense with Section 143(2)

Even where the assessee requests that the original return filed under Section 139 be treated as the return filed in response to Section 148, the Revenue remains under an obligation to issue the notice under Section 143(2).

3.  Section 142(1) cannot substitute Section 143(2)

A letter or notice under Section 142(1), even if it seeks explanations regarding the proposed reassessment, does not amount to compliance with the mandatory requirement of Section 143(2).

The Importance of the Judgment for Taxpayers

The judgment has considerable practical significance.

In reassessment cases, taxpayers often receive several communications from the Income Tax Department. Notices under Sections 148, 142(1), questionnaires and other communications may create an impression that the assessment proceedings are procedurally complete.

This judgment makes one point clear:

The existence of several communications cannot compensate for the complete absence of a statutorily mandatory notice.

Therefore, taxpayers and tax professionals handling reassessment proceedings should carefully verify whether the Section 143(2) notice was actually issued within the applicable statutory framework.

A Word of Caution for Tax Professionals

The judgment should not be misunderstood as saying that every defect relating to Section 143(2) will automatically invalidate an assessment.

The Supreme Court has specifically drawn the distinction between non-service or defective service and complete non-issuance.

Section 292BB may have consequences where a notice has actually been issued but the assessee challenges the manner or timing of service. The Court’s ruling is particularly emphatic where the Revenue itself cannot establish that the mandatory notice was ever issued.

Hence, while examining an assessment order, the first question should be:

Was the notice issued at all?

Only thereafter should questions concerning service, timing and manner of service be examined.

The Larger Principle: Procedure Is Not Always a Technicality

Tax proceedings are often described as proceedings where substance should prevail over technicalities. That principle, however, cannot be used to bypass a statutory requirement that goes to the jurisdiction and validity of the assessment.

The Supreme Court’s judgment reinforces an important principle:

When Parliament prescribes a mandatory statutory step, compliance cannot be replaced by participation, correspondence or procedural convenience.

A taxpayer’s cooperation cannot confer a jurisdiction which the Assessing Officer does not otherwise possess.

Conclusion

The Supreme Court’s decision in PCIT v. Orissa Mining Corporation Ltd. [2026 INSC 1171] is an important judgment on the interplay between Sections 143(2), 142(1), 147, 148 and 292BB of the Income-tax Act, 1961.

The message is unambiguous:

«Participation cannot cure complete absence of a mandatory notice.»

If no notice under Section 143(2) was issued, the fact that the assessee participated in reassessment proceedings, responded to Section 142(1) notices or failed to object at an earlier stage does not, by itself, validate the reassessment.

The judgment therefore deserves close attention in every reassessment case where the validity of proceedings under Section 147 is under examination.

For taxpayers and professionals alike, the lesson is simple: Never assume that a notice is merely a formality. In tax law, sometimes the notice is the jurisdiction.

The copy of the order is as under:

SPECIAL LEAVE PETITION (C) NO. 14546OF 2023