Natural justice in assessment proceedings: order set aside where notice came after the decision and statutory power was misused.

An assessment order passed before issuance and service of the relied-on notice was held vitiated for breach of natural justice, because the assessee had no effective pre-decisional opportunity to respond. The court also found that invoking section 84 within a revisional exercise under section 27 was legally unsustainable, as the provision could not be used in that manner at the assessment stage. The assessment order was set aside and the matter remitted for fresh consideration after due notice and hearing.

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Issues: (i) Whether the assessment order was vitiated for want of prior notice and denial of opportunity before passing the order. (ii) Whether reference to section 84 while revising the assessment under section 27 was sustainable.

Issue (i): Whether the assessment order was vitiated for want of prior notice and denial of opportunity before passing the order.

Analysis: The assessment was passed before the notice relied on by the Department was even issued and served. The notice could not cure the prior defect because the impugned order had already been made. The absence of an effective pre-assessment opportunity amounted to a clear breach of natural justice.

Conclusion: The issue is answered in favour of the assessee.

Issue (ii): Whether reference to section 84 while revising the assessment under section 27 was sustainable.

Analysis: Section 84 could be invoked only in the manner permitted by law after the assessment proceedings were completed, not as a basis for the revisional exercise undertaken in the assessment order. The invocation of section 84 in that context was legally unsustainable and showed an erroneous understanding of the assessing authority's power.

Conclusion: The issue is answered in favour of the assessee.

Final Conclusion: The assessment order was set aside for breach of natural justice and legal error in the exercise of assessment power, and the matter was directed to be reconsidered afresh after due notice and hearing.

Ratio Decidendi: An assessment made without an effective pre-decisional opportunity and founded on an impermissible invocation of statutory power is liable to be quashed and remitted for fresh decision in accordance with law.

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