Turnover mismatch assessments require verification, notice and hearing before fresh orders are passed, the Madras HC reaffirmed.

Turnover mismatch reflected on the departmental website against the dealer's returns was held to require reconsideration where the later circular prescribed verification, notice, opportunity of hearing, and further action depending on whether the mismatch was clerical, inadvertent, bogus, or unresolved. The Madras HC set aside the assessment order for non-compliance with that procedure and directed fresh consideration after notice and hearing, applying the requirements of natural justice.

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Issues: Whether the mismatch-based assessment order could be sustained in the light of the subsequent departmental circular and whether the matter required reconsideration after hearing the dealer.

Analysis: The dispute arose from a turnover mismatch reflected in the departmental website vis-a -vis the returns filed for the assessment year 2010-11. The earlier judicial directions on handling mismatch cases had led to issuance of a departmental circular prescribing a procedure for verification, notice, opportunity of hearing, and further action depending upon whether the mismatch was clerical, inadvertent, bogus, or otherwise unresolved. In that backdrop, the impugned assessment was set aside and the matter was sent back for fresh consideration in accordance with the circular and the requirements of natural justice.

Conclusion: The impugned order was quashed and the matter was remitted for fresh orders after notice and hearing, in favour of the assessee.

Ratio Decidendi: A mismatch-based assessment must be reconsidered where the governing administrative circular requires verification, notice, and hearing, and the assessment cannot stand without compliance with that procedure.

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