Natural justice in best judgment assessment: undisclosed market data and unauthorised appellate enhancement cannot sustain tax liability.

An appellate authority cannot enhance an assessee's tax liability in an appeal filed only by the assessee without a departmental appeal, revision, or valid suo motu power. In addition, where books of account are rejected for best judgment assessment under the Tripura Purchase Tax Act, the authority must record cogent reasons and disclose the material relied upon so the assessee can meet it. Reliance on undisclosed market rates or unverified comparable purchases breaches natural justice. On this reasoning, the impugned assessment and appellate enhancement were quashed and the matter was remitted for fresh reassessment after disclosure and hearing.

---

---

Issues: (i) whether the appellate authority could enhance the taxable purchase rate in the assessee's appeal without any appeal or revision by the Department; (ii) whether the assessment could be sustained when the books of account were rejected and higher rates were adopted without disclosing the material relied upon to the assessee.

Issue (i): whether the appellate authority could enhance the taxable purchase rate in the assessee's appeal without any appeal or revision by the Department.

Analysis: In an appeal filed only by the assessee, the appellate authority enhanced the purchase rate beyond the rate fixed by the assessing officer. Such enhancement was made in the absence of any departmental appeal, revision, or suo motu exercise of power. An appellate authority cannot aggravate the liability of the appellant in that manner.

Conclusion: The enhancement by the appellate authority was illegal and unsustainable, and this issue was decided in favour of the assessee.

Issue (ii): whether the assessment could be sustained when the books of account were rejected and higher rates were adopted without disclosing the material relied upon to the assessee.

Analysis: Under Section 8(3) of the Tripura Purchase Tax Act, 1990, assessment must follow hearing and consideration of evidence. If the assessing authority rejects the books of account, it must record cogent reasons and disclose the material relied upon so that the assessee gets a fair opportunity to meet it. Best judgment assessment cannot rest on mere suspicion, private market information, or unverified comparative rates not put to the assessee. Since the relevant material on market rates and comparable purchases was not furnished, the assessment was vitiated by breach of natural justice.

Conclusion: The assessment orders could not be sustained and were set aside, with reassessment directed after disclosure of material and opportunity of hearing, in favour of the assessee.

Final Conclusion: The impugned assessment and appellate actions were quashed, and the matter was remitted for fresh reassessment in accordance with law after giving the assessee an effective opportunity to respond to the material proposed for reliance.

Ratio Decidendi: Rejection of books of account and best judgment assessment must rest on cogent, disclosed material and a fair opportunity to the assessee to meet that material; an appellate authority cannot enhance liability in an assessee's appeal without jurisdiction to do so.

---