Section 292BB IT Act Inapplicable Where Notice Not Issued At All; Notice Under Section 143(2) Mandatory Jurisdictional Prerequisite For Reassessment Under Section 147: Supreme Court

"A notice under section 143(2) of the Act is sine qua non for a proceeding for reassessment under Section 147 of the Act. In the absence of a notice under Section 143(2) of the Act, no further proceedings can be undertaken by the Revenue... Said deeming fiction cannot come into play where the Revenue has admittedly not even issued the notice." Supreme Court on October 28, 2026, held that Section 292BB of the Income Tax Act, 1961 cures only defects in the service of a notice and does not rescue the Revenue when a statutory notice under Section 143(2) of the Act has not been issued at all.

A Bench comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva ruled that issuance of notice under Section 143(2) of the Act is a mandatory jurisdictional condition precedent for reassessment under Section 147, and failure to issue it vitiates the entire reassessment order, even if the assessee participated in the proceedings.

The assessees, Orissa Mining Corporation Ltd. and Bijoy Kishore Mohanty, had filed original returns under Section 139 of the Act, which were duly assessed under Section 143(3). The Revenue subsequently reopened assessments under Section 147 and issued notices under Section 148, pursuant to which the assessees requested that their original returns be treated as returns in response to the Section 148 notices. The Assessing Officer directly issued notices under Section 142(1) without issuing any notice under Section 143(2), completed reassessments, and framed orders. While the CIT(A) upheld the assessments by invoking Section 292BB, the ITAT and the High Court set them aside for want of jurisdiction.

The Supreme Court examined whether Section 292BB precludes an assessee who participated in reassessment from raising the non-issuance of a Section 143(2) notice, whether treating an earlier Section 139 return as a return under Section 148 dispenses with the Section 143(2) notice, and whether an inquiry notice under Section 142(1) can substitute compliance with Section 143(2).

Section 143(2) notice constitutes an indispensable jurisdictional prerequisite for reassessment

The Bench reaffirmed the foundational principles laid down in Assistant Commissioner of Income Tax v. Hotel Blue Moon (2010) 3 SCC 259, observing that Section 143(2) mandates personal or evidentiary requisition to ensure proper assessment. The Court held that omission to issue such a notice cannot be characterized as a mere curable procedural irregularity, emphasizing that it constitutes an incurable jurisdictional defect.

"A notice under section 143(2) of the Act is sine qua non for a proceeding for reassessment under Section 147 of the Act. In the absence of a notice under Section 143(2) of the Act, no further proceedings can be undertaken by the Revenue."

Section 292BB deeming fiction cures service defects, not complete non-issuance

Addressing the Revenue's reliance on Section 292BB, the Court clarified the statutory boundary of the deeming fiction. The Bench pointed out that Section 292BB only estops an assessee from claiming that a notice was not served, not served in time, or improperly served. The Court underscored that this fiction presupposes that the notice was actually issued and dispatched by the department.

"Said deeming fiction can come into play only if notice is alleged to have been sent by the Revenue... 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."

The Court drew support from its earlier ruling in CIT v. Laxman Das Khandelwal (2021) 18 SCC 691, reiterating that Section 292BB does not save the total absence of notice, and that mere participation by the taxpayer cannot confer jurisdiction where the statutory threshold of issuing notice was completely breached.

Adoption of original Section 139 return does not absolve requirement of Section 143(2) notice

The Supreme Court decisively rejected the Revenue’s argument that an assessee who requests their original return filed under Section 139 to be treated as their return in response to Section 148 forfeits the right to a Section 143(2) notice. The Bench affirmed that an assessee is legally entitled to adopt their original return without filing a fresh physical document.

"If the Assessee seeks to reiterate its earlier Return of Income, it is not necessary for the Assessee to refile a copy of its earlier Return of Income... Thus, the obligation on the Revenue to issue a notice under Section 143(2) of the Act, requiring the Assessee to produce evidence on which the Assessee seeks to rely on in support of the Return of Income, cannot be dispensed with."

Section 142(1) requisition cannot substitute mandatory Section 143(2) notice

The Bench firmly held that issuing an inquiry letter or requisition under Section 142(1) seeking documents or stock statements during the assessment proceedings cannot cure the non-issuance of a Section 143(2) notice. The Court stated that an inquiry notice cannot breathe life into proceedings that are fundamentally void from inception.

"A notice under section 143(2) of the Act is a sine qua non for commencing the proceedings. A letter issued after commencing the proceedings would not cover up the lacuna in the proceedings and would not validate what is non est."

The Supreme Court dismissed all the appeals filed by the Revenue, confirming the orders of the ITAT and the High Court which had quashed the reassessment proceedings as invalid and non est in law.

Date of Decision: October 28, 2026