Natural justice in assessment orders requires consideration of assessee objections; non-consideration of limitation plea warranted fresh adjudication.

Assessment orders were found defective where the assessing authority failed to consider the assessee's detailed objections, including the plea that the demand was time-barred. The omission to deal with the reply and sur-rejoinder meant the conclusions were not shown to have been reached after proper consideration of the material placed on record, amounting to a breach of natural justice. The Madras HC therefore set aside the assessment only on the disputed issue of alleged excess taxation on sale value below cost and remitted the matter for fresh consideration after hearing the assessee.

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Issues: Whether the assessment orders, insofar as they related to the disputed turnover and denial of exemptions, were vitiated for breach of natural justice because the assessee's objections, including the objection on limitation, were not considered and a fresh adjudication was required.

Analysis: The impugned orders did not deal with the objections raised in the assessee's detailed reply and sur-rejoinder. The omission was material, particularly because the plea that the demand was time-barred found no reference in the orders. As the conclusions were not shown to have been drawn after considering the objections and supporting material placed before the assessing authority, the decision-making process was held to be defective. The proper course was to set aside the orders only to the extent of the challenged issue and require a fresh hearing.

Conclusion: The assessment orders were set aside only on the issue relating to alleged excess taxation on sale value below cost, and the matter was remitted for fresh consideration after hearing the assessee.

Ratio Decidendi: An assessment order is liable to be set aside where material objections raised by the assessee, especially a plea of limitation, are not considered, since such non-consideration amounts to a breach of natural justice requiring fresh adjudication.

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