Natural justice requires an effective hearing before best judgment assessment is finalised; remand ordered.

An assessment made on best judgment basis was set aside because the assessee had replied to the notice and specifically sought a personal hearing and leave to produce additional documents if required. The assessing authority finalised the assessment without granting that effective opportunity. The HC held that, where such a request is made, the authority must hear the assessee before concluding the assessment; failure to do so violates natural justice. The assessment order was therefore liable to be quashed and the matter remitted for fresh adjudication after hearing the assessee and considering additional material, if available.

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Issues: Whether the assessment order passed under best judgment assessment was vitiated for denial of an effective opportunity of hearing.

Analysis: The assessee had responded to the notice and had specifically sought an opportunity of hearing and permission to place additional documents if the reply was found unsatisfactory. The assessing authority proceeded to complete the assessment without granting such hearing. In these circumstances, the Court held that the assessee was entitled to an effective opportunity to explain its stand before the assessment was finalised.

Conclusion: The assessee was denied an effective opportunity of hearing, and the assessment order was liable to be set aside.

Final Conclusion: The matter was restored to the assessing authority for fresh adjudication after hearing the assessee and permitting production of additional material, if available.

Ratio Decidendi: Where a dealer seeks a hearing in response to a proposed best judgment assessment, the assessing authority must afford an effective opportunity before finalising the assessment; failure to do so violates the principles of natural justice and warrants remand.

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