Fair hearing in assessment demands disclosure of adverse material, but supply of seized documents may be regulated to prevent account manipulation.

Adverse material proposed for use in assessment proceedings must be disclosed to the dealer so it can be explained or rebutted, because fair hearing requires notice of relied-upon documents. At the same time, the timing of supply may be regulated on reasonable grounds: where the dealer had failed to produce relevant books of account and manipulation was a concern, insisting on prior production before furnishing certified copies of seized slips, diary pages and the vigilance report was justified on the facts. The court also indicated that, where regular books are seized, copies of those books and other incriminating materials should be furnished when sought before the dealer is called upon to answer them.

---

---

Issues: (i) Whether a dealer is entitled to be supplied with materials intended to be used against him in assessment proceedings for rebuttal. (ii) Whether the assessing officer was justified in insisting on production of books of account for verification before supplying certified copies of the seized slips, diary pages, and the vigilance report.

Issue (i): Whether a dealer is entitled to be supplied with materials intended to be used against him in assessment proceedings for rebuttal.

Analysis: The right to a fair hearing requires that any material proposed to be used against a person in a prejudicial proceeding be disclosed to him so that he may explain or rebut it. In assessment matters, the authority may collect materials behind the assessee's back, but only those materials which are relied upon against the dealer must be put to notice before they are used in the assessment order. The dealer's explanation on such materials must be considered by the assessing authority.

Conclusion: The dealer is entitled to be supplied with the materials intended to be used against him in assessment proceedings for rebuttal.

Issue (ii): Whether the assessing officer was justified in insisting on production of books of account for verification before supplying certified copies of the seized slips, diary pages, and the vigilance report.

Analysis: In the facts of the case, the dealer had not produced the books of account at the time of inspection, and even thereafter no complete books for the relevant period were produced before the authorities for a considerable time. In that situation, requiring prior production of books of account before furnishing copies of the seized materials was treated as a reasonable safeguard to prevent manipulation of accounts in line with the seized papers. At the same time, the Court clarified that where regular books of account are also seized, copies of such books and other incriminating materials should be furnished when sought before the dealer is asked to explain them.

Conclusion: The assessing officer was justified in insisting on production of books of account before supplying certified copies of the seized materials on the facts of the case.

Final Conclusion: The writ petition was disposed of with directions to verify the books of account against the seized materials, confront the dealer with the report and seized documents, and thereafter permit certified copies of the materials proposed to be used against the dealer.

Ratio Decidendi: In assessment proceedings, adverse materials must be disclosed to the dealer for rebuttal, but the timing of supply may be regulated reasonably to prevent manipulation of accounts where the dealer has failed to produce the relevant books of account.

---