Taxpayer Participation Can’t Cure Missing Section 143(2) Notice: Supreme Court Upholds Setting Aside Orissa Mining Corp Reassessments

The Revenue reopened assessments previously completed under Section 143(3) of the Income Tax Act, 1961, and issued notices under Section 148.

Orissa Mining Corporation Ltd. asked that its original returns be treated as returns in response to the notices; Bijoy Kishore Mohanty refiled the returns originally submitted under Section 139.

The Revenue did not issue notices under Section 143(2), but proceeded with reassessment, including by issuing notices under Section 142(1).

The assessees challenged the reassessment orders. The ITAT set them aside for want of Section 143(2) notices, and the High Court upheld the ITAT’s decisions. The Revenue appealed to the Supreme Court.

The appeals concerned assessment years 2008–09, 2010–11 and 2011–12 for Orissa Mining Corporation Ltd., and 2009–10 and 2010–11 for Bijoy Kishore Mohanty

Section 143(2) requires the Assessing Officer, where a return is to be scrutinised, to serve notice requiring the assessee to attend or produce evidence in support of the return; the Court held that this notice is mandatory in reassessment proceedings and that its omission is not a curable procedural irregularity (*Assistant Commissioner of Income Tax v. Hotel Blue Moon*).

Section 292BB deems a notice to have been duly served despite defects in service, timing or manner where the assessee has participated, but does not cure the complete absence or non-issuance of a notice (*Commissioner of Income Tax v. Laxman Das Khandelwal*).

An assessee may rely on an earlier Section 139 return in response to a Section 148 notice without refiling it, but that does not dispense with the Revenue’s obligation to issue a Section 143(2) notice.

A notice or letter under Section 142(1) does not substitute for the distinct notice required by Section 143(2).

No Section 143(2) notice was issued in any of the appeals, even though the assessees’ returns—whether newly filed or adopted from their original returns—were used in the reassessment proceedings.

The Court held that participation in the proceedings could not confer jurisdiction or validate the assessments: Section 292BB addresses defects in service of an issued notice, not the failure to issue one at all.

Nor did the assessees’ reliance on their original returns remove the statutory notice requirement, and the Assessing Officer’s Section 142(1) correspondence could not cure the omission.

Finding no merit in the appeals, the Court dismissed them and affirmed the decisions setting aside the reassessments.