Natural justice in reassessment: third-party extracts alone cannot sustain additions without supporting material or cross-examination.

Reassessment under the Tamil Nadu General Sales Tax Act based only on third-party extracts was held unsustainable where the assessees were not given the underlying materials or an effective opportunity to cross-examine. The Tribunal found no independent corroboration, such as payment records, transport documents, or check-post evidence, linking the assessees to the alleged suppressed purchases. Applying natural justice and the requirement of a reasonable opportunity in reassessment proceedings, it held that the department had not discharged its burden. The reassessment additions were therefore not proved and could not stand, and the related penalty also fell with the addition.

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Issues: Whether the reassessment made under Section 16(1) of the Tamil Nadu General Sales Tax Act, 1959, on the basis of third-party extracts alone, without furnishing supporting materials or affording effective cross-examination, could be sustained.

Analysis: The revision assessments were founded only on extracts received from Karnataka authorities, while the assessees consistently disputed the alleged purchases and sought the underlying records and cross-examination. The Tribunal found that no independent corroborative material, such as payment details, transport records, or check-post documents, was produced to connect the assessees with the alleged suppressed transactions. It further held that, in the facts of the case, a mere communication of extracts did not constitute a fair and reasonable opportunity to rebut the proposed additions. Applying the principles of natural justice and the statutory requirement of reasonable opportunity in reassessment proceedings, the Tribunal concluded that the burden had not been discharged by the department.

Conclusion: The reassessment additions were not proved and could not be sustained; the corresponding penalty also fell with the addition. The revision failed.

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