Ex parte assessment without notice is vulnerable to natural justice challenge, with remand and time-bound reassessment.

An ex parte assessment made without proof of service of notice or an effective opportunity of hearing is vulnerable to being set aside for breach of natural justice, with remand for fresh assessment after adequate hearing. The text also notes that, on remand following violation of natural justice, the statutory time-limit relaxation under the Act may apply to the reassessment proceedings, enabling completion within the period directed by the Court. The underlying merits of the transaction were left open, including the contention that the movement of goods was a stock transfer rather than a sale, and the attachment was preserved until fresh adjudication.

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Issues: (i) Whether the ex parte assessment order and consequent demand notice were liable to be quashed for want of notice and opportunity of hearing, and the matter remanded for fresh assessment; (ii) whether, upon remand in writ jurisdiction, the limitation relaxation relied upon under the Act applied to the reassessment proceedings.

Issue (i): Whether the ex parte assessment order and consequent demand notice were liable to be quashed for want of notice and opportunity of hearing, and the matter remanded for fresh assessment.

Analysis: The assessment record did not service of notice upon the assessee before completion of the assessment. The order was therefore treated as ex parte. In view of the substantial tax demand and the absence of service, the Court found that the assessee had been deprived of an effective opportunity of hearing. The Court also left open the merits of the underlying transaction, including the plea that the movement of goods was stock transfer and not a sale.

Conclusion: The ex parte assessment order and the connected demand notice were quashed and the matter was remanded to the assessing officer for fresh decision after granting adequate opportunity of hearing. The finding was in favour of the assessee.

Issue (ii): Whether, upon remand in writ jurisdiction, the limitation relaxation relied upon under the Act applied to the reassessment proceedings.

Analysis: The Court accepted the submission that the reassessment should be concluded within a specified time after service of the Court's order and held that, in the circumstances of a remand following violation of natural justice, the statutory relaxation concerning time limit would govern the fresh assessment proceedings. The Court directed the assessing officer to complete the exercise within eight weeks.

Conclusion: The reassessment was directed to be completed within the stipulated period, and the question of limitation was negatived against the assessee's challenge.

Final Conclusion: The writ petition succeeded to the extent of setting aside the ex parte assessment and demand, while preserving attachment until fresh adjudication and directing a time-bound reassessment.

Ratio Decidendi: An assessment made ex parte without proof of notice and opportunity of hearing is liable to be set aside for breach of natural justice, and the matter may be remanded for fresh assessment with a time-bound direction.

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