Non-Issuance Of Section 143(2) Income Tax Notice Vitiates Reassessment Proceedings: SC

The Supreme Court has ruled that the complete failure to issue a statutory notice under Section 143(2) of the Income Tax Act, 1961 renders reassessment proceedings entirely non-est and fatal. Striking down attempts to cure the absence of notice through assessee participation, the Apex Court affirmed that the deeming fiction under Section 292BB cannot validate reassessments where no notice was ever dispatched.

A Bench comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva held that issuing a notice under Section 143(2) is a mandatory condition precedent for undertaking reassessments under Section 147 of the Income Tax Act, 1961.

Analyzing the statutory scheme, the Supreme Court stressed that notice under Section 143(2) grants the assessee an essential opportunity to substantiate their return. Addressing the Revenue's reliance on Section 292BB of the Income Tax Act, 1961, the Apex Court clarified that the deeming legal fiction assumes service only when the notice was actually sent by the Revenue. Highlighting the legal principle, the Apex Court affirmed that participating in reassessment proceedings cannot confer jurisdiction upon an Assessing Officer if the mandatory foundational notice was never issued.

The Court observed that "Only when the Revenue contends that a notice, as required under the Act has been sent, the Assessee who has participated in the proceedings or inquiry relating to assessment or reassessment, pursuant to the notice would be precluded from taking any objection that the notice was not served upon him, or was not served in time, or that the service of notice was not proper. Said deeming fiction cannot come into play where the Revenue has admittedly not even issued the notice. Where the Revenue itself contends that no notice was sent, as required under the Act, the provision of Section 292BB will have no applicability."

Background

The dispute originated when the Revenue sought to reopen assessments under Section 147 of the Income Tax Act, 1961 for respondents Orissa Mining Corporation Ltd. and Bijoy Kishore Mohanty for various assessment years. Notices under Section 148 of the Income Tax Act, 1961 were issued asking them to file returns in the prescribed form. The assessees informed the Revenue that their original returns filed under Section 139 of the Income Tax Act, 1961 be treated as the returns in response to the Section 148 notice.

Thereafter, the Assessing Officer commenced reassessment proceedings and issued notices under Section 142(1) of the Income Tax Act, 1961 seeking financial details, but failed to issue any notice under Section 143(2) of the Income Tax Act, 1961. Following reassessment orders, the assessees appealed. While the Commissioner of Income Tax (Appeals) rejected their challenge, the Income Tax Appellate Tribunal set aside the reassessment orders due to the lack of Section 143(2) notice. The High Court upheld the Appellate Tribunal's orders.

On appeal, the Supreme Court relied on Assistant Commissioner of Income Tax and Another vs. Hotel Blue Moon ( "2010) 3 SCC 259": 2010 CaseBase(SC) 959), which established that the omission to issue a notice under Section 143(2) is not a curable procedural irregularity. The Court further cited Commissioner of Income Tax vs. Laxman Das Khandelwal ( "(2021) 18 SCC 691": 2019 CaseBase(SC) 2262) to reiterate that Section 292BB does not save the complete absence or non-issuance of notice. Finding no merit in the Revenue's appeals, the Supreme Court dismissed them all.

Case Details:
Case No.: Civil Appeal No. of 2026 (@ Special Leave Petition (C) No. 14546 OF 2023)
Neutral Citation: 2026 INSC 1171
Case Title: Principal Commissioner of Income Tax, Bhubaneshwar v. Orissa Mining Corporation Ltd.

Source: 2026 CaseBase(SC) 9511