Natural justice in tax assessment requires independent consideration of objections, not blind reliance on audit reports.

The Madras HC held that an assessment completed solely on the basis of an audit report, without dealing with the dealer's objections or granting an effective personal hearing, violated natural justice and amounted to abdication of statutory duty. The notice relied upon did not relate to the relevant assessment year, and the assessment order failed to consider the objections on their merits or pass a speaking order. The assessment was therefore unsustainable and was set aside. The matter was remitted for fresh notice, consideration of objections, personal hearing, and de novo assessment in accordance with law.

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Issues: Whether the assessment order was liable to be set aside for violation of principles of natural justice and for non-consideration of the dealer's objections, requiring a fresh assessment after notice and hearing.

Analysis: The notice relied on by the assessing authority did not pertain to the relevant assessment year, and even if the dealer's later reply was treated as an objection, its contents were not dealt with in the assessment order. The order showed that the assessment was completed solely on the basis of the audit report. The assessing authority was required to act as an independent statutory authority, treat the audit only as information, consider the dealer's objections on all aspects, afford personal hearing, and pass a speaking order. Failure to do so amounted to abdication of statutory duty and a breach of natural justice.

Conclusion: The assessment order was unsustainable and was set aside. The matter was remitted for issuance of fresh notice, consideration of objections, personal hearing, and de novo assessment in accordance with law.

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