Supreme Court: Tax reassessment void without Section 143(2) notice

The Supreme Court on 28 October 2026 held that an income tax reassessment is invalid if the Assessing Officer never issued a notice under Section 143(2) of the Income Tax Act, 1961, even when the taxpayer took part in the proceedings without objecting. The court dismissed appeals by the Principal Commissioner of Income Tax, Bhubaneshwar, against Orissa Mining Corporation Ltd and an individual taxpayer.

What Happened

According to the judgment, the tax department had reopened completed assessments under Section 147 and issued notices under Section 148, covering assessment years 2008-09, 2010-11 and 2011-12 for Orissa Mining Corporation and 2009-10 and 2010-11 for the individual. Orissa Mining Corporation asked that its original return be treated as its reply to the Section 148 notice. Admittedly, no Section 143(2) notice was issued; the officer only sent notices under Section 142(1) seeking documents before passing reassessment orders.

The Commissioner of Income Tax (Appeals) rejected the taxpayers' objection, but the Income Tax Appellate Tribunal set the reassessment orders aside and the High Court upheld the tribunal. The Supreme Court found no infirmity in that view.

The court held that Section 292BB, which treats a notice as validly served once a taxpayer participates, covers only defects in serving a notice that was actually sent. It does not save a case where no notice was issued at all. The department's duty to issue the notice remains even when the taxpayer relies on its earlier return, and a letter under Section 142(1) during the proceedings is not enough. Citing its 2010 ruling in the Hotel Blue Moon case, the court said missing this notice is not a curable procedural slip.

What It Means

For taxpayers whose past assessments are reopened, the ruling confirms that the Assessing Officer must serve a Section 143(2) notice before framing a reassessment. Taking part in the proceedings does not cure its absence, and the court held that a taxpayer is not barred from raising the objection in any proceedings under the Act merely because they cooperated earlier.

The court also said a taxpayer who receives a Section 148 notice may simply state that the earlier return be treated as the reply, without refiling a copy.

Source: Supreme Court judgment