Assessments conducted without hearing, inadequate notice deemed. Assessments to be treated as show-cause notices.

The court found that assessments were conducted without providing the petitioner an opportunity to be heard. The notice given before assessment was deemed inadequate. The court directed the assessments to be treated as show-cause notices, allowing the petitioner three weeks to respond. No extension of time was permitted for filing the reply. Demands and recovery proceedings were canceled, with the Department instructed to issue fresh orders after providing the petitioner an opportunity to be heard for realization of payments. The writ petitions were disposed of with specified directions, and no costs were awarded.

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Issues:
1. Assessment made without opportunity of being heard.
2. Validity of notice before assessment.
3. Compliance with legal requirements of notice before assessment.
4. Opportunity of being heard to the assessee.
5. Time period for filing reply to show-cause notices.
6. Granting extension of time for filing reply.
7. Cancellation of demands or recovery proceedings.
8. Realization of amount directed to be paid under fresh orders.

Analysis:

1. The petitioner contended that assessments were conducted and demand notices issued without providing an opportunity to be heard. The Assistant Commissioner of Income-tax issued a letter, which the petitioner argued did not constitute a proper notice as required by law before assessment.

2. The Department's standing counsel referred to a notice dated November 23, 1994, as the notice given to the assessee before the assessment. However, the court found that this notice was a show-cause notice for launching prosecution proceedings, not related to the assessment process.

3. The court examined a second letter dated February 13, 1995, where the petitioner's exemptions were rejected without a prior opportunity to be heard. The letter also contained an offer for voluntary tax payment to avoid penalties or prosecution, indicating a lack of proper notice before assessment.

4. Considering the circumstances, the Department suggested treating the assessment orders as show-cause notices and allowing the assessee to respond within a specified time. The court accepted this proposal, granting the petitioner three weeks to file its reply to the show-cause notices.

5. While the petitioner requested a month for filing the reply, the Department initially proposed seven days, later suggesting a maximum of two weeks. The court decided on a middle ground, granting three weeks from the date of the judgment for filing the reply.

6. The court emphasized that no extension of time would be allowed for filing the reply, ensuring a strict deadline for compliance with the show-cause notices.

7. The judgment directed the cancellation of demands or recovery proceedings based on the previous orders under section 201 of the Income-tax Act.

8. Following the cancellation, the Department was permitted to issue fresh orders under section 201 after providing an opportunity to the petitioner to be heard. The Department could then take appropriate legal steps for the realization of any directed payments under the fresh orders.

In conclusion, the writ petitions were disposed of with the specified directions, and no costs were awarded in the matter.

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