Natural justice in assessment requires effective opportunity to object and cross-examine before adverse material is finalised.

An assessment based on a surprise inspection and adverse material cannot be finalised without affording the assessee an effective opportunity to file objections and meet the proposed additions. Where the assessee seeks verification of the purchase materials through summoning alleged sellers and cross-examination, principles of natural justice require that such requests be considered before the order is concluded. The assessment order was set aside and the matter remitted to the assessing authority for a detailed enquiry, including summoning the sellers and permitting cross-examination.

---

---

Issues: Whether the assessment order could be sustained when the assessee was not given an effective opportunity to file objections and seek cross-examination of the alleged sellers, and whether the matter warranted remand for fresh enquiry.

Analysis: The assessment was founded on a surprise inspection and consequential proposals treating the purchases as suppression. The assessee sought an opportunity to contest the proposed additions and relied on the need for a fair enquiry. In such circumstances, where the impugned order proceeded after recording absence of objections, the requirement of a fair hearing and effective opportunity to meet the materials against the assessee assumed significance. The request for summoning the sellers and allowing cross-examination was also directed to the reliability of the purchase verification and the fairness of the assessment process.

Conclusion: The impugned order was set aside and the matter was remitted to the assessing authority for detailed enquiry, including summoning the sellers and permitting cross-examination. The writ petitions were allowed.

Ratio Decidendi: An assessment founded on adverse material must comply with the principles of natural justice by affording an effective opportunity to contest the material and, where necessary, to test it through cross-examination before finalisation.

---