Natural justice in tax assessment: uncommunicated proposals cannot support an adverse order without revised notice and hearing

Assessment orders cannot be sustained when the authority travels beyond the proposals in the original notice and confirms additional grounds without first serving a revised notice and supporting materials. Where fresh material such as website data is relied on, the assessee must be given an effective opportunity to object and be heard before adverse action is taken. Uncommunicated proposals offend natural justice and render the assessment unsustainable. The Madras High Court accordingly set aside the impugned assessment orders and remitted the matters for fresh consideration after proper notice and opportunity of defence.

---

---

Issues: Whether additional proposals incorporated in the final assessment without serving a revised notice and supporting materials violated the principles of natural justice.

Analysis: The assessment notice originally contained only certain proposals, but the final order went beyond those proposals by including additional grounds based on web-site data and other materials. In such a situation, the proper course was to issue a revised notice setting out all proposals and to afford the dealer an opportunity to file objections and be heard before any adverse order was passed. Tax could not be levied on uncommunicated proposals, as that would deprive the assessee of a meaningful opportunity of defence.

Conclusion: The additional proposals were not validly communicated and their confirmation breached natural justice; the assessment order was unsustainable.

Final Conclusion: The writ petitions succeeded to the extent of setting aside the impugned assessment orders and sending the matters back for fresh consideration after issuing proper notice and granting opportunity of objection and hearing.

Ratio Decidendi: An assessment cannot be sustained when the authority travels beyond the proposals in the notice and confirms additional grounds without first serving them and affording the assessee an effective opportunity to respond.

---