Natural justice in tax assessment: material mismatch in demand notice and final order justified setting aside and conditional remand.

An assessment confirmed without an effective opportunity of hearing, and where the final demand materially differed from the proposal in Form ASMT-10, was treated as unsustainable for breach of natural justice. The notice, intimation and show cause process reflected a proposed liability of Rs.33,270, but the order confirmed Rs.1,84,835, which undermined the validity of the confirmation. The matter was therefore remanded for fresh consideration, with the taxpayer permitted to file a reply, granted a personal hearing, and required to deposit 10% of the disputed tax demand before reconsideration.

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Issues: (i) Whether the assessment order was liable to be set aside for breach of principles of natural justice and discrepancy in the tax proposal. (ii) Whether the matter should be remanded subject to payment of 10% of the disputed tax demand.

Issue (i): Whether the assessment order was liable to be set aside for breach of principles of natural justice and discrepancy in the tax proposal.

Analysis: The notice in Form ASMT-10, the intimation and the show cause notice disclosed a proposed liability of Rs.33,270/-, whereas the impugned order confirmed a tax liability of Rs.1,84,835/-. The petitioner was not afforded an effective opportunity before the proposal was confirmed, and the discrepancy in the figures weighed against sustaining the order.

Conclusion: The assessment order was unsustainable and was set aside on account of breach of natural justice.

Issue (ii): Whether the matter should be remanded subject to payment of 10% of the disputed tax demand.

Analysis: The Court found it just to grant a fresh opportunity to the petitioner while balancing the respondent's interest by putting the petitioner on terms. The petitioner was permitted to file a reply and was required to remit 10% of the disputed tax demand before a fresh hearing and reconsideration.

Conclusion: The matter was remanded for fresh consideration subject to deposit of 10% of the disputed tax demand and grant of personal hearing.

Final Conclusion: The impugned order was annulled and the dispute was sent back for reconsideration after affording the petitioner an opportunity of reply and hearing, with the remand made conditional upon partial payment of the disputed demand.

Ratio Decidendi: An assessment confirmed without an effective opportunity of hearing, especially where the notice and the final demand materially differ, cannot be sustained and may be set aside with a conditional remand for fresh adjudication.

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