No Section 143(2) Notice, No Valid Reassessment! Supreme Court Rules That Section 292BB Cannot Cure Complete Absence of Mandatory Notice

 

 

PCIT v. Orissa Mining Corporation Ltd. | 2026 INSC 1171 | Supreme Court | Judgment dated 28 October 2026

Can an Assessing Officer complete reassessment proceedings without issuing the mandatory notice under Section 143(2) of the Income-tax Act, 1961? Can the Revenue subsequently argue that the assessee participated in the proceedings and, therefore, the defect stands cured under Section 292BB?

Can a notice under Section 142(1), asking the assessee to furnish documents and information, be treated as a substitute for the mandatory notice under Section 143(2)?

The Supreme Court of India has now answered these questions decisively.

In a significant judgment delivered on 28 October 2026, in Principal Commissioner of Income Tax, Bhubaneswar v. Orissa Mining Corporation Ltd., reported as 2026 INSC 1171, the Supreme Court has reaffirmed that issuance of notice under Section 143(2) is a mandatory jurisdictional requirement for completing reassessment proceedings under Section 147.

The Court has categorically held that Section 292BB can cure defects relating to the service of a notice, but it cannot cure the complete absence or non-issuance of a mandatory statutory notice.

In other words, participation by the assessee in reassessment proceedings does not confer jurisdiction upon the Assessing Officer where the mandatory notice under Section 143(2) was never issued.

This judgment is particularly important for taxpayers, tax practitioners and assessing authorities dealing with reassessment proceedings.

Let’s examine the facts, legal issues and important observations of the Supreme Court.

1.  Background and Facts of the Case

The dispute arose in the context of reassessment proceedings initiated against Orissa Mining Corporation Ltd. and other connected assessees.

The Income-tax Department had issued notices under Section 148 requiring the assessees to furnish their income-tax returns.

The assessees complied with the notices and filed their returns. Thereafter, during the reassessment proceedings, the Assessing Officer issued notices under Section 142(1), calling for various documents, explanations and information, including details relating to the assessee’s affairs.

However, an important statutory requirement was overlooked: the Assessing Officer had not issued the mandatory notice under Section 143(2).

Despite the absence of this notice, the reassessment proceedings were continued.

The Revenue sought to defend the assessment by arguing that the assessee had participated in the proceedings and had not raised an objection regarding non-issuance of the notice under Section 143(2).

The Revenue relied upon Section 292BB, contending that the assessee’s participation in the proceedings cured the defect.

The matter ultimately reached the Supreme Court.

2.  Three Important Questions Before the Supreme Court

The judgment examined three important legal issues:

Question 1: Can Section 292BB cure non-issuance of notice under Section 143(2)?

Whether an assessee who appeared and cooperated during reassessment proceedings could subsequently challenge the reassessment on the ground that the mandatory notice under Section 143(2) had never been issued.

Question 2: Is Section 143(2) notice necessary even where the original return is treated as the return filed in response to Section 148?

Whether the Revenue is absolved of its obligation to issue notice under Section 143(2) when the assessee requests that the return originally filed under Section 139 be treated as the return filed in response to the notice under Section 148.

Question 3: Can a notice under Section 142(1) substitute for a notice under Section 143(2)?

Whether a letter or notice issued under Section 142(1), calling for documents and explanations during reassessment proceedings, can satisfy the mandatory requirement of issuing notice under Section 143(2).

The Supreme Court answered all three questions in favour of the assessee.

3.  Section 143(2): A Mandatory Requirement, Not a Mere Procedural Formality

The Supreme Court reiterated the importance of Section 143(2) in the assessment process.

Section 143(2) provides the statutory mechanism through which the Assessing Officer communicates the requirement for the assessee to attend or produce evidence in support of the return filed.

The Court relied upon its earlier decision in Assistant Commissioner of Income Tax v. Hotel Blue Moon (2010) 3 SCC 259.

In that judgment, the Supreme Court had already held that omission to issue notice under Section 143(2) cannot be treated as a mere procedural irregularity capable of being cured.

The Court reaffirmed that where the Assessing Officer intends to make an assessment after enquiry, the statutory requirements under Sections 142, 143(2) and 143(3) must be followed.

The requirement of issuing notice under Section 143(2) is not optional.

The Court observed that:

“A notice under Section 143(2) of the Act is sine qua non for a proceeding for reassessment under Section 147 of the Act.”

The expression sine qua non means an essential or indispensable condition.

Thus, without issuance of the prescribed notice, the Assessing Officer cannot proceed to complete the reassessment in the manner contemplated by the statute.

4.  Section 292BB Cannot Cure Complete Absence of Notice

This is perhaps the most important aspect of the judgment.

Section 292BB was introduced to prevent assessees from raising technical objections relating to service of statutory notices after having participated in assessment or reassessment proceedings.

Under this provision, where an assessee has appeared in proceedings or cooperated in an inquiry, the notice required to be served upon him is deemed to have been duly served in time and in accordance with law.

However, the Supreme Court has now clearly explained the limits of this deeming fiction.

There is a fundamental difference between:

– A notice having been issued but not properly served;

– A notice having been served belatedly; and

– A notice never having been issued at all.

Section 292BB can address defects relating to service of a notice which was issued.

It cannot create a notice where none existed in the first place.

The Supreme Court relied upon its earlier judgment in Commissioner of Income Tax v. Laxman Das Khandelwal (2021) 18 SCC 691.

The Court reiterated the principle that Section 292BB deals with infirmities in service and does not cure the complete absence of a mandatory notice.

The distinction is crucial: Defective service may be protected by Section 292BB, but complete non-issuance cannot be cured by participation.

5.  Participation by the Assessee Does Not Confer Jurisdiction on the Assessing Officer

The Revenue’s argument was essentially that the assessee had participated in the reassessment proceedings and had not objected to the absence of notice under Section 143(2).

The Supreme Court rejected this contention.

The Court held that Section 292BB does not preclude an assessee from raising an objection regarding non-issuance of notice under Section 143(2), merely because the assessee appeared and cooperated during the reassessment proceedings.

This observation is extremely significant.

Participation in assessment proceedings cannot be treated as a substitute for compliance with a mandatory statutory requirement.

An assessee may furnish documents, explanations, bank statements and other information in response to notices issued by the Assessing Officer.

However, such participation cannot automatically confer jurisdiction upon the Assessing Officer when a mandatory statutory notice has never been issued.

The statutory requirement cannot be waived merely because the assessee cooperated with the Department.

6.  Even a Request to Treat the Original Return as the Section 148 Return Does Not Eliminate the Requirement

Another important issue considered by the Supreme Court concerned the treatment of the original return filed under Section 139.

In certain reassessment cases, an assessee may request that the return originally filed under Section 139 be treated as the return filed in response to the notice under Section 148.

The Revenue’s argument was that in such circumstances, the requirement of issuing a fresh notice under Section 143(2) should not apply.

The Supreme Court rejected this argument as well.

It held that the Revenue is not absolved of its obligation to issue notice under 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 the notice under Section 148.

Therefore, the treatment of an earlier return as a return in response to Section 148 does not dispense with the statutory requirement of Section 143(2).

7.  Notice Under Section 142(1) Cannot Substitute Notice Under Section 143(2)

This is another extremely important clarification.

In many reassessment proceedings, the Assessing Officer issues notices under Section 142(1) requiring the assessee to furnish:

– Books of accounts;

– Bank statements;

– Details of investments;

– Information regarding transactions;

– Explanations regarding various issues; and

– Other supporting documents.

The Revenue may contend that since the assessee has already received such notices and has furnished the required information, the purpose of issuing notice under Section 143(2) has effectively been achieved.

The Supreme Court has rejected this approach.

It held that a letter issued under Section 142(1) during reassessment proceedings, requiring the assessee to explain the grounds on which reassessment of income was proposed, does not amount to sufficient compliance with the mandatory obligation to serve notice under Section 143(2).

The two provisions operate in different contexts and serve different statutory purposes.

A notice under Section 142(1) cannot replace the mandatory notice under Section 143(2).

The Court further observed that a letter issued after commencement of the proceedings cannot cover up the statutory lacuna or validate what is non est.

This observation should serve as an important reminder to assessing authorities that compliance with one statutory provision cannot automatically substitute compliance with another.

8.  The Supreme Court Dismisses the Revenue’s Appeals

After examining the statutory provisions and earlier judicial precedents, the Supreme Court found no infirmity in the view taken by the Income Tax Appellate Tribunal, as affirmed by the High Court.

The Court dismissed the Revenue’s appeals.

The three legal questions were answered as follows:

Issue| Decision of Supreme Court

Can Section 292BB cure non-issuance of Section 143(2) notice?| No

Is Section 143(2) notice mandatory even where the original Section 139 return is treated as the Section 148 return?| Yes

Can a Section 142(1) notice or letter substitute for Section 143(2)?| No

The judgment was delivered by the Bench comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva on 28 October 2026.

Citation: Principal Commissioner of Income Tax, Bhubaneswar v. Orissa Mining Corporation Ltd., 2026 INSC 1171.

9.  Practical Implications for Taxpayers and Tax Practitioners

The judgment has considerable importance in the context of reassessment litigation.

Taxpayers and their representatives should carefully examine the notice history in every reassessment case.

The following checks become particularly relevant:

1.  Verify issuance of notice under Section 143(2).

Merely receiving a notice under Section 148 does not establish compliance with the subsequent statutory requirement under Section 143(2).

2.  Examine whether the notice was actually issued.

The distinction between non-service and non-issuance is fundamental. The notice records and departmental service history should be examined.

3.  Do not treat Section 142(1) notices as substitutes.

A detailed questionnaire or repeated requisitions for documents under Section 142(1) cannot replace the mandatory notice under Section 143(2).

4.  Participation does not automatically defeat the objection.

Even where the assessee has furnished documents and cooperated throughout the reassessment proceedings, the complete absence of a mandatory Section 143(2) notice remains a legally sustainable objection.

5.  Examine the assessment and reassessment records carefully.

The actual issuance of the statutory notice, its date and the applicable limitation requirements must be verified.

The judgment does not mean that every defect in a reassessment notice invalidates the proceedings. The nature of the defect and the applicable statutory provisions must be examined carefully.

Conclusion: Procedure Is Not an Empty Formality in Tax Administration

The Supreme Court’s decision in PCIT v. Orissa Mining Corporation Ltd. reinforces a fundamental principle of tax jurisprudence: statutory requirements governing the assumption and exercise of assessment jurisdiction must be strictly followed.

Section 292BB was never intended to provide a blanket protection to the Revenue for failure to issue mandatory statutory notices.

There is a clear distinction between a notice which has been issued but suffers from defects in service and a notice which has never been issued.

While the former may attract the protection of Section 292BB, the latter cannot be cured by the assessee’s participation in the proceedings.

Equally importantly, a notice under Section 142(1) cannot be used as a substitute for a notice under Section 143(2).

The judgment is a timely reminder that the power to assess or reassess income must be exercised strictly in accordance with law.

An Assessing Officer cannot acquire jurisdiction merely because an assessee cooperates, furnishes documents or participates in the proceedings. Jurisdiction must flow from the statute, not from the conduct of the assessee.

In tax administration, compliance with procedure is not a technical luxury; it is a statutory necessity.

—

Case Law References

1.  Principal Commissioner of Income Tax, Bhubaneswar v. Orissa Mining Corporation Ltd., 2026 INSC 1171, decided on 28 October 2026.

2.  Assistant Commissioner of Income Tax v. Hotel Blue Moon, (2010) 3 SCC 259.

3.  Commissioner of Income Tax v. Laxman Das Khandelwal, (2021) 18 SCC 691.

The copy of the order is as under:

SPECIAL LEAVE PETITION (C) NO. 14546OF 2023