Natural justice in reassessment: failure to furnish relied-upon materials vitiated the order despite an available appeal.

Where a reassessment rests on debit notes and statements obtained during inspection, the assessing authority must furnish those relied-upon materials before completing the order so the assessee can raise effective objections. Failure to supply the requested documents deprived the assessee of a meaningful opportunity to meet the case and amounted to breach of audi alteram partem. The availability of an appellate remedy did not cure the defect, particularly where the statutory appellate scheme restricted additional evidence. The Madras HC therefore set aside the reassessment order as void for violation of natural justice.

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Issues: Whether the reassessment order was liable to be quashed for violation of natural justice on the ground that copies of relied-upon debit notes and connected materials were not furnished before passing the order.

Analysis: The assessment was founded on debit notes and statements obtained during inspection, yet the petitioner repeatedly sought copies of the documents so that objections to the proposed tax demand could be filed effectively. No intimation was given that the requested documents would not be supplied, and the petitioner was led to believe that an effective opportunity would be provided. Passing the order without furnishing those materials deprived the petitioner of a meaningful chance to meet the case against it and amounted to denial of audi alteram partem. The availability of an appellate remedy did not cure the defect, and the restrictions on receiving additional evidence at the appellate stage under the statutory scheme meant that the petitioner could not be compelled to proceed only by appeal.

Conclusion: The reassessment order was void for violation of natural justice and was set aside in favour of the petitioner.

Ratio Decidendi: An assessment order based on materials not furnished to the assessee and passed without an effective opportunity to object is vitiated for breach of natural justice, and such defect is not cured merely because an appeal may lie.

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