Natural justice in reassessment proceedings requires consideration of objections and a personal hearing before adverse tax liability is fixed.

A reassessment order cannot be sustained where the assessee's objections and supporting documents are not considered and a requested personal hearing is denied, because tax proceedings carrying adverse civil consequences must comply with natural justice. The Madras High Court set aside the impugned order and remitted the matter to the Department for fresh consideration after affording personal hearing and an opportunity to produce documents.

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Issues: Whether the reassessment order could be sustained when the assessee's objections and supporting documents were not considered and personal hearing was not afforded.

Analysis: The order showed no proper consideration of the materials furnished by the assessee and the outside-State buyer. The request for personal hearing was also not addressed. In tax proceedings, where adverse civil consequences follow, a fair opportunity to meet the proposed demand is an essential component of natural justice. An order passed without considering the objections and without granting the requested hearing cannot be sustained.

Conclusion: The impugned reassessment order was set aside in favour of the assessee, and the matter was remitted to the Department for fresh consideration after affording personal hearing and opportunity to produce documents.

Ratio Decidendi: A tax order that determines liability adversely must be set aside when it is passed without considering the assessee's objections and without granting a requested personal hearing, as this violates the principles of natural justice.

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