Natural justice in ex parte tax assessment requires a meaningful opportunity to produce records before final determination.

An ex parte tax assessment was quashed because the assessee was not given a meaningful opportunity to produce books of account and supporting documents before finalisation. The High Court noted that the assessee had sought time due to the authorised representative's hospitalisation, yet the explanation was not adequately considered and the resulting liability was substantial. The assessment proceedings were restored, with directions that one effective opportunity be given to the assessee to appear and comply with the required deposit and production conditions before reassessment.

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Issues: Whether an ex parte assessment order passed without granting a meaningful opportunity to produce books of account and documents should be quashed and the assessment proceedings restored.

Analysis: The assessment was completed ex parte after the assessee sought time on the ground that the authorised representative was hospitalised and could not attend with the records. The Court found that the Assessing Officer did not adequately consider this explanation and that the liability imposed was substantial. In these circumstances, the Court held that one effective opportunity should be afforded to the assessee to place the account books and other documents before the Assessing Officer before finalisation of the assessment.

Conclusion: The ex parte assessment was quashed and the assessment proceedings were restored, with direction to the assessee to appear and comply with the specified deposit and production requirements.

Ratio Decidendi: An ex parte tax assessment that results in a substantial liability should be set aside where the assessee was denied a fair opportunity to present relevant records, as observance of natural justice requires meaningful hearing before final determination.

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