Natural justice requires a fair hearing before tax demands with serious civil consequences are finalised

An assessment and demand order was quashed because it was passed on the first hearing date after short notice, without giving the assessee a fair and sufficient opportunity to respond. The Court held that where an order carries serious civil consequences, the affected party must receive at least one effective hearing and an adequate chance to meet the case. On the facts, the lack of meaningful opportunity went to the root of the decision, so the matter was remitted to the Assessing Officer for fresh consideration after granting proper hearing.

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Issues: Whether the assessment and demand order was liable to be quashed for violation of natural justice for want of adequate opportunity of hearing, and whether the matter required remand for fresh decision.

Analysis: The assessment was made on the first hearing date itself after a short notice, and the order fastened a substantial tax and interest liability on the assessee. The Court held that where an order entails serious civil consequences, the affected party must be given a fair and sufficient opportunity to meet the case, including at least one effective hearing. In the facts of the case, the assessee was not afforded adequate opportunity before the impugned order was passed, so the defect went to the root of the decision.

Conclusion: The assessment and demand order was quashed for breach of natural justice, and the matter was remitted to the Assessing Officer for fresh consideration after granting adequate opportunity of hearing to the assessee.

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