Natural justice breach in assessment usually leads to remand, not voidness, while remand may leave evidentiary findings open.
A breach of natural justice, including use of material collected behind an assessee's back without an opportunity to rebut or cross-examine, ordinarily justifies setting aside the assessment and remanding the matter for fresh consideration; it does not render the assessment void ab initio if the assessing authority retains jurisdiction. The Tribunal's observation on alleged on-money was treated as conditional rather than a binding direction, leaving the Assessing Officer free on remand to assess the evidence, whether direct or circumstantial, and determine if the allegation was proved. The challenge to the remand failed, and interference with the Tribunal's observation was also declined.
Issues: (i) Whether an assessment made on material gathered behind the assessee's back and without opportunity to rebut or cross-examine is void ab initio or liable to be set aside and remanded; (ii) Whether, on remand, the Tribunal could indicate that addition for alleged on-money cannot be made in the absence of evidence directly linking the assessee to such payment.
Issue (i): Whether an assessment made on material gathered behind the assessee's back and without opportunity to rebut or cross-examine is void ab initio or liable to be set aside and remanded.
Analysis: A breach of natural justice vitiates the assessment, but the ordinary consequence is setting aside of the order and remand to the same authority for fresh consideration. Such an order is not rendered void ab initio merely because the assessee was denied access to the material or the chance to cross-examine the deponent, so long as the original authority retains jurisdiction to proceed again.
Conclusion: The assessment was not void ab initio; remand was permissible, and the assessee's challenge failed.
Issue (ii): Whether, on remand, the Tribunal could indicate that addition for alleged on-money cannot be made in the absence of evidence directly linking the assessee to such payment.
Analysis: The Tribunal's observation was conditional and did not amount to a direction to decide the matter in a predetermined manner. The evidentiary basis for alleged on-money may be direct or circumstantial, and the Assessing Officer on remand remained free to examine the entire material and determine whether the allegation was established.
Conclusion: The Tribunal's direction was upheld and did not vitiate the remand.
Final Conclusion: The challenge to the remand was rejected, while the Revenue's grievance against the Tribunal's observation also did not result in interference; the matter stood disposed of in accordance with the answers to the substantial questions of law.
Ratio Decidendi: An assessment vitiated for violation of natural justice is ordinarily set aside and remanded, not treated as void ab initio, and a remand order may validly preserve the authority's discretion to decide on the evidentiary sufficiency of the alleged addition.
TaxTMI 
AI Drafter ✕
TaxTMI 
