Natural justice requires assessment authorities to consider accounts and objections before reversing input tax credit.

An assessment order is unsustainable where the assessing authority ignores the assessee's trading and profit and loss account, fails to consider a detailed reply to the pre-revision notice, and applies Rule 8(5) mechanically. Once such material is filed, the authority must examine its genuineness and deal with the objections on merits; failure to give reasons for rejecting the explanation violates natural justice. On the facts, there was no wilful suppression of sales or purchases, and reversal of input tax credit could not be sustained without proper consideration of the records and objections. The assessment was quashed and the matter remitted for fresh consideration with an opportunity of hearing.

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Issues: Whether the assessment order was vitiated for non-consideration of the trading, profit and loss account and the objections raised by the assessee, and whether the consequent assessment and reversal of input tax credit could be sustained.

Analysis: The assessee had produced the trading, profit and loss account and a detailed reply to the pre-revision notice, but the assessment order contained no discussion on those materials and instead applied the formula under Rule 8(5) mechanically. Once such material was filed, the assessing authority was bound to examine whether it was genuine and to deal with the objections on merits. The order also failed to record any reason for disregarding the assessee's explanation, resulting in violation of natural justice. On the facts found, there was no willful suppression of sales and purchases, and the grievance regarding reversal of input tax credit could not be sustained without proper consideration of the assessee's records and objections.

Conclusion: The assessment order was unsustainable and was rightly quashed, with the matter remitted for fresh consideration after granting opportunity of hearing.

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