Unconditional apology and breach of natural justice led to recall of adverse allegations, fresh assessment, and hearing.

Acceptance of an unconditional apology and withdrawal of a perjury allegation led to deletion of the prima facie penal allegations and recall of the inquiry direction, as the disputed email was admitted to be genuine and attributed to a systems error. The note also records that where an assessment order and demand notice are passed in breach of natural justice, the proper course is to set them aside and remand the matter for fresh assessment after giving the taxpayer a hearing. The commentary therefore emphasises recall of adverse directions on admission of error and remand as the corrective remedy for procedural unfairness.

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Issues: (i) whether the allegations of prima facie penal offences and the direction for inquiry were liable to be recalled and deleted on acceptance of the respondent's unconditional apology; (ii) whether the impugned assessment order and notice of demand were liable to be set aside and the matter remanded for fresh assessment for breach of natural justice.

Issue (i): whether the allegations of prima facie penal offences and the direction for inquiry were liable to be recalled and deleted on acceptance of the respondent's unconditional apology.

Analysis: The respondent accepted that the disputed email was genuine and explained that it had arisen due to a systems error. The allegation of perjury had been made without proper verification, and the deponent expressly withdrew it and tendered an unconditional apology. In view of this admission and apology, the earlier direction calling for an inquiry into the email no longer survived.

Conclusion: The allegations were deleted and the earlier direction for inquiry was recalled.

Issue (ii): whether the impugned assessment order and notice of demand were liable to be set aside and the matter remanded for fresh assessment for breach of natural justice.

Analysis: The respondent admitted that the assessment order and demand notice had been passed in violation of the principles of natural justice. Once such violation was accepted, the appropriate course was to set aside the assessment and require a fresh decision after affording an opportunity of hearing.

Conclusion: The assessment order and notice of demand were set aside and the matter was remanded for fresh adjudication after hearing the petitioner.

Final Conclusion: The petitioner obtained complete substantive relief, as the adverse allegations and inquiry direction were withdrawn and the tax assessment was reopened for fresh consideration in accordance with law.

Ratio Decidendi: Where the respondent accepts procedural illegality and the absence of verified basis for adverse allegations, the proper relief is recall of the earlier direction and remand for fresh assessment after observance of natural justice.

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