Natural justice requires a reasonable hearing before reassessment; ex parte orders were quashed, but reassessment permission was upheld.
A reassessment order passed after very short notice, rejection of adjournment, and ex parte disposal without a proper opportunity of hearing violates natural justice and is vitiated by serious procedural illegality; the reassessment orders were quashed. The permission granted under section 21(2) to initiate reassessment was treated separately from the conduct of the proceedings, and no basis was found to interfere with that permission; it was upheld. The reassessment could, however, proceed afresh in accordance with law after giving the assessees a reasonable hearing.
Issues: (i) whether the reassessment orders could stand when the assessees were not afforded a proper and reasonable opportunity of hearing before the reassessment proceedings culminated in ex parte orders; (ii) whether the permission granted under section 21(2) for reassessment was liable to be interfered with.
Issue (i): whether the reassessment orders could stand when the assessees were not afforded a proper and reasonable opportunity of hearing before the reassessment proceedings culminated in ex parte orders.
Analysis: The material on record showed that the assessees were informed of the reassessment proceedings on very short notice, their request for adjournment was rejected, and the reassessment orders were passed ex parte. In such a situation, the requirement of fairness in adjudication was not satisfied. A reassessment order passed without a proper opportunity of hearing offends the principles of natural justice and amounts to serious procedural illegality.
Conclusion: The reassessment orders could not be sustained and were liable to be quashed.
Issue (ii): whether the permission granted under section 21(2) for reassessment was liable to be interfered with.
Analysis: The Court distinguished between the grant of permission to initiate reassessment and the manner in which the reassessment proceedings were conducted. The procedural defect was confined to the denial of effective hearing before the assessing authority, and no ground was found to unsettle the permission already granted by the higher authority under section 21(2).
Conclusion: The permission granted under section 21(2) was upheld.
Final Conclusion: The reassessment orders were set aside for breach of natural justice, but the reassessment could proceed afresh in accordance with law after giving the assessees a proper hearing, while the permission already granted for reassessment remained undisturbed.
Ratio Decidendi: An assessment or reassessment order passed without affording a reasonable and effective opportunity of hearing is vitiated by breach of natural justice and cannot be sustained.
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