Assessment based only on a challenged circular was quashed, with fresh record-based assessment ordered and liberty to reopen later.

An assessment made solely by relying on a challenged circular could not be sustained where the assessing authority had not first examined the assessee's material, documents and account books. The court held that the proper course was a fresh assessment on independent record-based material, so that the assessee was not prejudiced while the circular's validity and applicability remained pending. The assessment orders were quashed and the matter remanded for fresh assessment, with liberty to reopen the assessment under Section 29 of the Commercial Tax Act after final decision on the circular.

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Issues: Whether the assessment could be sustained when it was made solely on the basis of a circular, and whether the proper course was to require a fresh assessment on the basis of the material produced by the assessee with liberty to reopen the matter after the final decision on the circular.

Analysis: The assessment was made essentially by relying on the impugned circular, without first examining its applicability to the assessee's case on the basis of the relevant material, documents, and account books. Since the validity and applicability of the circular were already under challenge and the issue was pending for final determination, the assessment could not properly rest only on that circular. A fresh assessment based on the record produced by the assessee, independent of the circular, would avoid prejudice and preserve the to reopen the matter later if the final decision on the circular so required. Section 29 of the Commercial Tax Act was viewed as the appropriate mechanism for such reopening.

Conclusion: The assessment orders could not stand as passed and were quashed. The matter was remanded for fresh assessment on independent material, with liberty to reopen the assessment under Section 29 of the Commercial Tax Act after the final decision on the circular.

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