Natural justice in assessment proceedings: order set aside where illegible documents prevented effective consideration of the taxpayer's reply.

An assessment order under section 143(3) read with section 144B could not be sustained where the reply and supporting documents to the show-cause notice were not properly considered because many papers were illegible. The High Court held that the opportunity to respond was not an effective opportunity when the material could not be meaningfully examined; if legible copies were required, the assessee should have been called upon to furnish them before the order was passed. Passing the assessment without proper consideration of the response and documents amounted to a violation of natural justice, and the order was set aside with a direction to pass a fresh order after considering the reply and legible copies.

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Issues: Whether the assessment order passed under section 143(3) read with section 144B of the Income-tax Act, 1961 was sustainable when the reply and supporting documents to the show-cause notice were not properly considered because several documents were illegible.

Analysis: The assessment order recorded that a substantial part of the filed compilation could not be gone through because the documents were not legible. In those circumstances, the opportunity given to respond to the show-cause notice was not an effective opportunity. If legible copies were required, the assessee ought to have been called upon to furnish them instead of proceeding to pass the assessment order. An assessment made without proper consideration of the response and documents amounted to violation of natural justice.

Conclusion: The assessment order could not be sustained and was set aside with a direction to pass a fresh order after considering the reply and legible copies of the documents.

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