Natural justice in tax assessment requires communicated personal hearing before finalising tax and penalty orders.

An assessment order imposing tax and penalty was set aside for breach of natural justice because no date of personal hearing was communicated before the final order. The pre-assessment notice had indicated that a personal hearing would be afforded, and the governing circular required a reasonable opportunity, consideration of objections, a speaking order, and personal hearing even if the dealer did not specifically request it. Since the assessee received no communicated hearing date, the assessment process was procedurally unfair. The matter was remitted for fresh assessment after granting personal hearing, and the tax merits were not examined.

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Issues: Whether the assessment order was liable to be set aside for violation of natural justice on the ground that no date of personal hearing was intimated before imposing tax and penalty.

Analysis: The assessment related to assessment year 2014-15. The petitioner had not filed a written reply to the pre-assessment notice, but the notice itself indicated that personal hearing would be afforded. The departmental circular governing pre-assessment procedure required reasonable opportunity, examination of objections, a speaking order, and personal hearing irrespective of whether the dealer specifically opted for it. The record showed that no date of personal hearing was communicated before the impugned assessment, even though penalty had also been imposed. In these circumstances, the order suffered from violation of principles of natural justice, and the merits of the tax dispute were not examined.

Conclusion: The assessment order was rightly set aside for breach of natural justice, and the matter was remitted for fresh assessment after affording personal hearing.

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