Assessment enhancement requires prior notice and hearing before any increase in tax liability can be sustained.

An assessment enhancement affecting tax liability cannot be sustained unless the assessee is first put to notice and given an opportunity of hearing. Where the record shows that no show-cause notice was issued before the Tribunal increased the assessment on the basis of an alleged computation mistake, the enhancement is invalid for breach of natural justice. The enhancement order was accordingly set aside, and the matter was remitted to the Tribunal to issue notice on the proposed enhancement and pass a fresh order after hearing the assessee.

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Issues: Whether the Tribunal could enhance the assessment without issuing notice to the assessee and without giving an opportunity of hearing.

Analysis: The enhancement was made on the basis of an alleged computation mistake, but the record disclosed that no show-cause notice had been issued to the assessee before the enhancement. Enhancement affecting tax liability could not be sustained without compliance with the requirement of notice and hearing. The order was therefore tested against the settled principle that an adverse enhancement must be preceded by an opportunity to meet the proposed increase.

Conclusion: The enhancement order was invalid and was set aside. The matter was remitted to the Tribunal to issue notice on the question of enhancement and to pass a fresh order after hearing the assessee.

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