Natural justice in income-tax assessment requires effective hearing and consideration of the reply before a speaking order is passed.

An assessment order passed pursuant to notice under section 142(1) of the Income-tax Act was held unsustainable because the assessee was not given an effective hearing and its reply was not duly considered. The breach of natural justice meant the order could not stand. The matter was remitted for fresh consideration, with direction to pass a speaking order after properly dealing with the representation already filed.

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Issues: Whether the assessment order passed pursuant to notice under Section 142(1) of the Income-tax Act, 1961 was liable to be set aside for breach of natural justice, and whether the matter should be remitted for fresh consideration.

Analysis: The impugned order was passed without granting the petitioner an effective hearing, notwithstanding the reply furnished to the notice. The order was found to have been made in violation of the principles of natural justice and therefore could not be sustained. Since the petitioner's representation had not been duly considered, a fresh speaking order was required after giving due consideration to the response already filed.

Conclusion: The impugned order was set aside and the matter was remitted to the respondent to pass a fresh speaking order after considering the petitioner's representation.

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