Natural justice requires effective cross-examination before reliance on co-noticee statements; the matter was remanded for fresh adjudication.

Reliance on statements of co-noticees without securing effective cross-examination and without giving the assessee a meaningful chance to rebut the material was inconsistent with natural justice. The adverse findings based on such untested statements could not be sustained on the existing record, so the matter was remanded for fresh adjudication after granting a reasonable opportunity to produce rebuttal evidence.

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Issues: Whether the adjudication order could be sustained when the assessee was not effectively given an opportunity to cross-examine the co-noticees whose statements were relied upon, and whether the matter required remand for fresh adjudication.

Analysis: The adverse findings were based on statements of co-noticees, yet effective cross-examination was not secured and the supporting material was not properly tested by rebuttal evidence. In such circumstances, reliance on those statements without affording a meaningful opportunity to meet them was inconsistent with the principles of natural justice. The matter therefore had to be reconsidered after granting a reasonable opportunity to produce evidence in rebuttal.

Conclusion: The impugned order could not be sustained on the existing record and the case was remanded for fresh decision after due opportunity to the assessee.

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