Natural justice in reassessment requires disclosure of adverse third-party material and a fair chance to cross-examine before reliance.

Assessment based on adverse third-party statements and records could not be sustained without furnishing those materials to the assessee and allowing a meaningful opportunity to challenge them, including cross-examination where specifically sought. The Madras HC held that the reassessment under Section 16 of the Tamil Nadu General Sales Tax Act, 1959 was vitiated because the petitioner's objection requesting copies and cross-examination was ignored, resulting in a breach of natural justice. The availability of an alternative appellate remedy did not prevent writ intervention where the violation was evident on the face of the record. The assessment orders were set aside and the matter remitted for fresh consideration after disclosure of the materials and opportunity of cross-examination.

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Issues: Whether the assessment orders were sustainable when they were based on third-party statements and records without furnishing copies of those materials and without affording the petitioner an opportunity of cross-examination.

Analysis: The impugned reassessment under Section 16 of the Tamil Nadu General Sales Tax Act, 1959 was founded on statements and records obtained from third parties, which were adverse to the petitioner. In such a situation, the petitioner was entitled to inspect the materials relied upon and to test their correctness by cross-examining the persons who made those statements. The request for copies and cross-examination was specifically raised in the objections to the pre-revision notice, and the respondent could not ignore that request while completing the assessment. The availability of an alternate appellate remedy did not bar writ jurisdiction in the circumstances, especially where breach of natural justice was apparent on the face of the record.

Conclusion: The impugned assessment orders were vitiated for violation of natural justice, and the matter had to be remitted for fresh consideration after furnishing the requested materials and providing an opportunity of cross-examination.

Ratio Decidendi: When an assessment is based on adverse third-party material, fairness requires disclosure of that material and a meaningful opportunity to confront it, including cross-examination where sought.

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