Mandatory show cause notice before reopening a deemed assessment was required; reassessment proceedings failed for non-compliance.

Reopening of a deemed assessment under the Bengal Finance (Sales Tax) Act, 1941 had to follow the mandatory procedure in rule 54AA(2), including service of a show cause notice on the dealer with at least 15 days to respond before reassessment could begin. As the record did not show service or even issuance of the required notice, and compliance was not otherwise proved, the reassessment proceedings were held vitiated. The reassessment notice and the consequential reassessment order were therefore set aside in favour of the assessee.

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Issues: Whether the reassessment notice and the subsequent reassessment order were liable to be set aside for non-service of the mandatory show cause notice before reopening the deemed assessment under the Bengal Finance (Sales Tax) Act, 1941.

Analysis: Reopening of a deemed assessment under section 11E(2) of the Bengal Finance (Sales Tax) Act, 1941 could be undertaken only in the manner prescribed by rule 54AA(2) of the Bengal Finance (Sales Tax) Rules, 1941. The prescribed procedure required service of a show cause notice on the dealer, with at least 15 days' time from service, before the authority could reopen the assessment and proceed to a fresh assessment. The records did not show service or even issuance of such notice, and the respondents were unable to produce material to establish compliance with this mandatory requirement.

Conclusion: The reassessment proceedings were vitiated for breach of the mandatory notice requirement, and both the reassessment notice and the subsequent reassessment order were set aside in favour of the assessee.

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