No Section 143(2) Notice, No Valid Reassessment: Supreme Court Rejects Tax Department’s Appeals

In Principal Commissioner of Income Tax, Bhubaneshwar v. Orissa Mining Corporation Ltd., 2026 INSC 1171, decided on 28 October 2026, the Supreme Court upheld the cancellation of reassessment orders because the Income Tax Department had never issued the mandatory notice under Section 143(2).

What happened in the case

The Department had already assessed the income-tax returns of Orissa Mining Corporation and another taxpayer, Bijoy Kishore Mohanty. It subsequently reopened their assessments and issued notices under Section 148.

Orissa Mining Corporation asked the Department to treat its original return as its response to the reopening notice. Mohanty refiled the same return previously submitted.

The Department then sought documents and information under Section 142(1) and completed the reassessments. However, it admittedly did not issue notices under Section 143(2), which give taxpayers an opportunity to produce evidence supporting their returns.

The taxpayers challenged the reassessments. The Commissioner of Income Tax (Appeals) rejected their objection because they had participated in the proceedings. The Income Tax Appellate Tribunal disagreed and set aside the reassessments. The High Court upheld that decision, prompting the Department’s appeals to the Supreme Court.

What the Supreme Court observed

The Court rejected the argument that participation by the taxpayers could cure the Department’s failure.

It explained that Section 292BB can address certain defects in the service of a notice that was actually issued. It cannot cure the complete absence of the notice itself. Simply attending proceedings or supplying documents does not give the Assessing Officer authority that the mandatory statutory notice was meant to confer.

The Court also rejected two other justifications:

- Asking the Department to rely on an earlier return does not remove its obligation to issue a Section 143(2) notice. - A request for documents or explanations under Section 142(1) is not a substitute for that notice.

The omission was therefore not a minor procedural mistake that could be overlooked. It invalidated the reassessments.

What the Court finally did

The Supreme Court dismissed the Department’s appeals. The decisions setting aside the reassessment orders remained intact.

Source

Supreme Court of India, Principal Commissioner of Income Tax, Bhubaneshwar v. Orissa Mining Corporation Ltd. and connected appeals, 2026 INSC 1171, decided on 28 October 2026 by Justices Sanjay Kumar and Sanjeev Sachdeva. Facts and procedural history: paragraphs 2–10; findings on Sections 143(2), 142(1) and 292BB of the Income-tax Act, 1961: paragraphs 12–23; dismissal of appeals: paragraph 24.

Official judgment: https://www.sci.gov.in/sci-get-pdf/?diary_no=106072023&from=latest_judgements_order&order_date=2026-10-28&type=j

General information disclaimer

This article explains the Court’s decision under the Income-tax Act, 1961 and is for general information, not advice on an individual tax dispute.

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