Natural justice required de novo adjudication where additional evidence had not been examined in a best judgment assessment.

Non-compliance in assessment proceedings led to a best judgment assessment under section 144 of the Income-tax Act, 1961, and the first appellate authority declined to admit the appeal for want of compliance with section 249(4)(b). The Tribunal noted that additional material, including books of account, bank statements, Form 26AS and income computation, had not been examined by the Assessing Officer. In the interest of natural justice, it set aside the appellate order and restored the matter to the Assessing Officer for de novo adjudication on merits.

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Issues: Whether the assessee's appeal deserved restoration for de novo adjudication in view of the non-compliance before the Assessing Officer and the first appellate authority, and the absence of consideration of the material now produced.

Analysis: The assessee had not complied with the assessment proceedings and the assessment was completed under section 144 of the Income-tax Act, 1961 on the basis of unexplained cash deposits and credit entries. The first appellate authority did not admit the appeal for want of compliance with section 249(4)(b) of the Income-tax Act, 1961. Before the Tribunal, additional material such as books of account, bank statements, Form 26AS and computation of income was produced, which had not been examined by the Assessing Officer. In these circumstances, and in the interest of natural justice, the matter required one more opportunity to be considered on merits.

Conclusion: The order of the first appellate authority was set aside and the matter was restored to the Assessing Officer for de novo adjudication. The appeal was treated as allowed for statistical purposes, resulting in relief to the assessee only to that extent.

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