Third-party mismatch assessments require disclosure of relied upon material and a fair hearing before they can stand.

Assessments based on third-party mismatch data must be preceded by supply of the relied upon particulars, an effective notice, and a meaningful opportunity to object and be heard. Where warranted, the assessee must also be allowed cross-examination. The prescribed mismatch procedure required verification of departmental data, disclosure of connected materials, objection proceedings, personal hearing, and fair adjudication in line with natural justice. Because those safeguards were not adequately followed, the assessments could not be sustained and were set aside, with fresh proceedings to be taken in accordance with the mismatch procedure.

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Issues: Whether assessments based on third-party mismatch data and allied material could be sustained without furnishing the relied upon particulars, issuing an effective notice, and affording a proper hearing including cross-examination where warranted.

Analysis: The assessments were founded on mismatch between the petitioner's returns and third-party data obtained from departmental sources and check-post records. The relied upon material had been referred to in the pre-assessment notices, but the petitioner's request for particulars was not met. The circular issued by the commercial taxes administration set out a procedure for mismatch cases, requiring verification of departmental data, issue of notice with all connected materials, opportunity to object, personal hearing, and, where appropriate, cross-examination. That procedure reflected the requirement that assessments on mismatch data must be preceded by meaningful opportunity and adherence to natural justice.

Conclusion: The impugned assessments could not be sustained and were set aside.

Final Conclusion: The writ petitions succeeded and the petitioner was entitled to fresh proceedings in accordance with the prescribed mismatch procedure and fair hearing requirements.

Ratio Decidendi: An assessment based on third-party mismatch material cannot be sustained unless the assessee is supplied the relied upon particulars and given an effective opportunity to meet the case, including hearing and cross-examination where appropriate.

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