Natural justice barred reassessment where relied-upon third-party material was withheld from the assessee before reopening.

Reassessment based on third-party search material, tally data and impounded documents was unsustainable where the relied-upon material, statements and opportunity for cross-examination were not furnished to the assessee before the section 148A(d) order and the reassessment. The non-supply of the very documents forming the basis of reopening denied an effective opportunity to object and rebut the proposed addition, breaching natural justice. Because the reopening itself was vitiated, the estimate of unrecorded turnover and the resulting addition could not be sustained. The reassessment proceedings and the addition were quashed.

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Issues: Whether the reassessment and resulting addition were sustainable when the material relied upon for reopening and addition was not furnished to the assessee.

Analysis: The reassessment was founded on tally data, impounded material and related documents said to have been found during a search on a third party. The assessee repeatedly sought copies of the relied-upon material, statements and cross-examination, but the material was not supplied before the order under section 148A(d) and the consequent reassessment. The non-supply of documents forming the basis of the reopening deprived the assessee of an effective opportunity to object to the reopening and to rebut the proposed addition. The reassessment proceedings were therefore hit by violation of the principles of natural justice. Once the reopening itself was vitiated, the estimation of unrecorded turnover and the addition made on that basis could not survive.

Conclusion: The reassessment proceedings and the addition were quashed, and the assessee succeeded.

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