Natural justice in reassessment: assessments set aside where no personal hearing was given and objections could not be filed effectively.

Reassessment proceedings based on a mismatch between monthly returns and audited accounts were held unsustainable because no personal hearing was granted and the taxpayer was not given an effective chance to file records and objections. The court treated the assessment orders as show cause notices and required a fresh assessment only after receiving objections and affording personal hearing, since denial of opportunity to explain the differential turnover and supporting accounts amounted to a breach of natural justice.

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Issues: Whether the assessment orders were liable to be set aside and the matter remanded for fresh consideration on the ground that no personal hearing was afforded and the petitioner was not given an effective opportunity to produce records and objections.

Analysis: The impugned reassessment proceedings were based on a discrepancy noticed between the monthly returns and the audited accounts. The petitioner sought an opportunity to explain the differential turnover and asserted that the disputed turnover related to non-taxable purchases. The record showed that no personal hearing had been granted before completing the assessments. In these circumstances, the absence of an opportunity to present supporting records and accounts amounted to a breach of the principles of natural justice.

Conclusion: The assessment proceedings were not sustainable in their present form and were directed to be treated as show cause notices, with a fresh assessment to be made after receiving objections and granting personal hearing. The petitioner obtained partial relief.

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