Cross-examination of third-party material in assessment is a curable procedural defect; remand is the proper remedy.

Assessment based on third-party books must comply with natural justice, and the assessee must have a fair opportunity to rebut material used against it. Where cross-examination of the third party was sought, summons had been issued, but the person was not traceable, the defect was treated as a curable procedural irregularity rather than a jurisdictional illegality. The assessment was therefore not annulled outright; remand was the proper remedy so the assessee could cross-examine the third party's representative before the assessment was completed.

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Issues: Whether an assessment based on entries in the books of a third party could be annulled for want of opportunity to cross-examine that party, or whether the proper course was to remand the matter to cure the procedural defect.

Analysis: The assessment proceedings were required to conform to the principles of natural justice, and the assessee was entitled to a fair opportunity to rebut material used against it. Where the assessee requested cross-examination of the third party and a summons had been issued but the party was not traceable, the defect was treated as an irregularity occurring in the course of assessment proceedings rather than a jurisdictional illegality. In such a situation, the assessment could not be struck down outright if the grievance was essentially for a reasonable opportunity to cross-examine; the proper course was to send the matter back so that the irregularity could be removed.

Conclusion: The revision was allowed and the matter was remanded to the assessing authority for affording the assessee an opportunity to cross-examine the representative of the third party before completing the assessment.

Ratio Decidendi: A denial of cross-examination of third-party material relied upon in assessment proceedings is a curable procedural irregularity, and where the assessee seeks only a fair opportunity to contest that material, remand rather than annulment is the appropriate remedy.

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