Adequate hearing in tax assessment disputes: disputed turnover additions and penalty were remitted after insufficient response time.

An assessment based on a pre-assessment notice giving only three days to respond was found inadequate where the taxpayer needed time to produce records and object to disputed turnover additions. The assessment was therefore set aside in respect of the disputed turnover additions, interest and consequential penalty, and remitted for fresh consideration after granting further opportunity. The taxpayer's admitted liability for reversal of input tax credit on the accepted items was left undisturbed, as those admissions did not require interference. The operative effect is that only the admitted reversal component remains sustained, while the contested portions must be reconsidered after proper hearing.

---

---

Issues: Whether the assessment order, insofar as it related to the disputed turnover additions, interest and consequential penalty, was liable to be set aside for want of sufficient opportunity and remitted for fresh consideration.

Analysis: The disputed assessment heads were founded on a pre-assessment process in which only three days were granted to respond. The petitioner had contested only some of the additions, while admitting liability on the reversal of input tax credit in respect of the items specifically accepted. The Court found that three days was inadequate to enable production of records and effective objection to the remaining proposals. Since the affected heads included the turnover additions and the consequential penalty, the assessment could not be sustained in those respects. At the same time, the admissions made by the petitioner in respect of the admitted heads did not require interference.

Conclusion: The assessment was sustained only to the extent of the admitted reversals of input tax credit, while the disputed heads and the consequential penalty were set aside and remitted for fresh assessment after granting further opportunity. The result is partly in favour of the petitioner and partly in favour of the revenue.

---