Natural justice in income-tax assessment requires a proper hearing; defective assessment was set aside and remanded for fresh decision.

An assessment made without giving the assessee a proper and reasonable opportunity of hearing is invalid, because compliance with natural justice goes to the root of the assessment order. Later production of evidence before the first appellate authority or the Tribunal does not cure that defect. The assessment order and the appellate orders were set aside, and the matter was remanded to the assessing authority for fresh consideration after affording the assessee a proper opportunity to present its case.

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Issues: Whether an assessment order can be sustained where the Income-tax Officer failed to give the assessee a proper opportunity of hearing, and whether such defect required the assessment to be set aside and the matter remanded for fresh assessment.

Analysis: The finding that the assessee had not been given a proper opportunity of being heard went to the validity of the assessment order itself. The fact that the assessee might have placed evidence before the first appellate authority or the Tribunal was held to be immaterial, because the assessment order must be made only after a reasonable opportunity is afforded to the assessee to present its case. On that basis, the view that the assessment need not be set aside and remitted was rejected.

Conclusion: The question was answered in the negative and in favour of the assessee. The assessment order, along with the appellate orders, was set aside and the matter was remanded to the assessing authority for fresh consideration after giving the assessee a proper opportunity of hearing.

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