Natural justice in tax assessment: assessment order quashed and remanded for fresh hearing after notice and hearing concerns.

Assessment proceedings were found vulnerable on natural justice grounds where the taxpayer had received prior intimation and a show cause notice, yet was not heard on the merits of the tax demand. The Madras HC held that a fresh opportunity was necessary for fair adjudication, and the assessment order was quashed with remand for reconsideration. The remand was made conditional on remittance of 10% of the disputed tax demand, filing of a reply to the show cause notice, and grant of a reasonable opportunity, including personal hearing.

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Issues: Whether the assessment order was liable to be quashed for breach of natural justice, including alleged non-service of the notices in the prescribed manner and denial of a reasonable opportunity of hearing.

Analysis: The record showed that an intimation and a show cause notice had preceded the assessment order and that personal hearings had been offered. The explanation that the petitioner was unaware of the proceedings was therefore not fully convincing. At the same time, the petitioner had not been heard on the merits of the tax demand, and a fresh opportunity was considered necessary to secure a fair adjudication.

Conclusion: The assessment order was quashed and the matter was remitted for fresh consideration, subject to remittance of 10% of the disputed tax demand, filing of a reply to the show cause notice, and grant of a reasonable opportunity including personal hearing.

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