Natural justice in compulsory acquisition requires disclosure of comparable instances and material in the show-cause notice.

In compulsory acquisition proceedings under Chapter XX-C of the Income-tax Act, 1961, the show-cause notice had to disclose the material and comparable instance forming the basis of the Appropriate Authority's tentative conclusion of undervaluation. A notice that merely alleged undervaluation, without revealing the basis later relied on in the acquisition order, denied the affected party an effective opportunity to rebut the proposed action and breached natural justice. The omission was not cured by the absence of a request for particulars, because the duty of disclosure rested on the authority itself. The acquisition order was therefore unsustainable and was set aside.

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Issues: Whether the order for compulsory acquisition under Chapter XX-C of the Income-tax Act, 1961, was vitiated because the show-cause notice did not disclose the comparable instance and material relied upon to form the tentative conclusion of undervaluation.

Analysis: The statutory scheme required the Appropriate Authority to form a tentative conclusion of undervaluation before proceeding to acquire the property, and that conclusion had to be communicated with the material on which it was based so that the affected party could effectively meet the case against it. A notice that merely alleged undervaluation without disclosing the comparable instance used later in the order denied an adequate opportunity to explain or rebut the proposed acquisition. The absence of a request by the petitioners for such particulars did not cure the defect, because the duty to disclose the basis of the proposed action lay on the authority itself.

Conclusion: The acquisition order was invalid for want of disclosure of the material and comparable instance in the show-cause notice, and the challenge succeeded.

Ratio Decidendi: In proceedings for compulsory acquisition on the ground of undervaluation, the show-cause notice must itself disclose the material and comparable instance forming the basis of the tentative conclusion, failing which the resulting order is unsustainable for denial of effective opportunity and breach of natural justice.

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