Reassessment sanction requires prior hearing and recorded reasons; ex parte reopening approval was set aside for breach of natural justice.

Before sanctioning reassessment under the proviso to section 21(2) of the U.P. Trade Tax Act, the assessee must be given an opportunity of hearing and the sanctioning authority must record reasons. Applying that controlling principle, the High Court held that a sanction granted after expiry of limitation, without notice, hearing, or recorded reasons, breached natural justice and could not stand. The impugned sanction order was set aside and the matter was remitted to the Commissioner for a fresh decision after hearing the petitioner.

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Issues: Whether permission to initiate reassessment under the proviso to section 21(2) of the U.P. Trade Tax Act could be granted without giving the assessee an opportunity of hearing and without recording reasons.

Analysis: The challenge was to the order granting sanction for reopening assessment after expiry of limitation. The record showed an assertion that no notice or hearing was afforded before the sanction was granted. The controlling principle, as applied, was that before sanctioning issuance of notice for reassessment under the proviso to section 21(2), the assessee must be heard and reasons must be recorded. The earlier binding view on the point was treated as governing and no distinguishing feature was shown.

Conclusion: The sanction order was unsustainable for breach of natural justice and for want of recorded reasons. The writ petition succeeded, the impugned order was set aside, and the matter was remitted to the Commissioner for fresh decision after hearing the petitioner.

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