Fair assessment procedure requires disclosure of third-party material, cross-examination on request, and reasoned decision-making.

An assessment based on third-party statements cannot be sustained unless the assessee is given a meaningful chance to meet that material, including cross-examination where requested. The assessment order must also show application of mind by addressing the assessee's objections and recording reasons for rejecting them; a bare conclusion is insufficient. On the facts described, the absence of reasons, the reliance on undisclosed adverse material, and the denial of cross-examination vitiated the assessment. The proper course in such a situation is to set aside the assessment and restore the matter for fresh consideration after giving adequate opportunity and examining the record afresh.

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Issues: (i) Whether the assessment order was vitiated for non-application of mind and want of reasons; (ii) Whether denial of copies of third-party statements and opportunity to cross-examine those persons vitiated the assessment; (iii) Whether the matter required remand for fresh consideration.

Issue (i): Whether the assessment order was vitiated for non-application of mind and want of reasons.

Analysis: The assessment order substantially reproduced the proposal notice and the dealer's explanations, but the actual finding was reduced to a single-line conclusion that the Department had proved the selling dealers to be bogus. The order did not deal with the factual material produced by the dealer or give reasons for rejecting the objections.

Conclusion: Yes. The assessment order was vitiated for non-application of mind and absence of reasons.

Issue (ii): Whether denial of copies of third-party statements and opportunity to cross-examine those persons vitiated the assessment.

Analysis: The proposed adverse material was gathered from third parties and relied upon against the dealer. Since the dealer sought the statements and requested cross-examination, the authority was bound to provide an effective opportunity to test that material before relying on it. Denial of such opportunity offended fairness in the assessment process.

Conclusion: Yes. The denial of cross-examination and use of third-party material behind the dealer's back vitiated the assessment.

Issue (iii): Whether the matter required remand for fresh consideration.

Analysis: Because the impugned assessment was set aside for want of reasons and breach of fair procedure, the proper course was to restore the matter to the assessing authority for a fresh decision after giving the dealer adequate opportunity and considering the records afresh.

Conclusion: Yes. The matter was remanded for de novo assessment.

Final Conclusion: The assessment was annulled and the dealer obtained a fresh opportunity before the assessing authority, which must reconsider the tax liability after following fair procedure and examining the material on record.

Ratio Decidendi: An assessment based on undisclosed third-party material cannot stand unless the affected assessee is given a meaningful opportunity to meet that material, including cross-examination where requested, and the order must contain reasons showing application of mind to the objections raised.

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