Natural justice in tax assessment requires disclosure of seized material and consideration of returns before demand and penalty.

Assessment based on a seized slip pad was held procedurally unfair where the taxpayer was not supplied a copy of the material relied on before demand and penalty were raised. The order was also defective because it failed to consider the filed returns and the claimed deductions and input-tax credits. Retention of the seized documents beyond the statutory retention period was not shown to be valid, and the availability of an alternative remedy did not cure the underlying breach of natural justice. The assessment order was quashed and the matter remitted for fresh decision in accordance with law, with the taxpayer entitled to a copy of the slip pad for reply purposes.

---

---

Issues: Whether the assessment order was liable to be quashed for violation of principles of natural justice, including non-supply of the seized slip pad and non-consideration of returns and input-tax claims, and whether retention of the seized documents beyond the statutory period was legally sustainable.

Analysis: The assessment was founded on entries in a seized slip pad, but the petitioner was not given a copy of that material to explain the entries before the demand and penalty were imposed. The order also did not deal with the returns filed by the petitioner or the deductions and input-tax claims raised therein. In addition, the seized documents were not shown to have been validly retained beyond the statutory period prescribed for retention, and the Court found the plea of alternative remedy to be without significance in the circumstances because the impugned action itself suffered from procedural unfairness.

Conclusion: The assessment order was quashed and the matter was remitted for fresh decision in accordance with law. The petitioner was entitled to a copy of the slip pad for reply purposes, while the Revenue was permitted to retain the original slip pad temporarily as directed.

---