Prior notice and hearing are required before rectification enhances tax liability; the impugned order and intimation were quashed.

A rectification that alters an assessment so as to increase tax or interest liability cannot be sustained unless the assessee is given prior notice and a reasonable opportunity of hearing. The court found that the rectification and consequential intimation affected liability, and the objection that the aggregate demand remained unchanged did not satisfy the statutory requirement. It therefore quashed the rectification order and the intimation, while permitting the assessee to pursue rectification proceedings after communication of the court's order.

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Issues: Whether the rectification order and consequential intimation, which allegedly enhanced liability without notice or hearing, were liable to be set aside.

Analysis: The intimation referred to an appeal order with an incorrect date, and the record showed that the rectification order had been communicated. However, the rectification was found to affect the tax and interest liability. Under the proviso to sub-section (1) of section 81, any amendment having the effect of enhancing an assessment or otherwise increasing the assessee's liability cannot be made without prior notice and a reasonable opportunity of hearing. The plea that the aggregate demand remained unchanged was not accepted as a answer to the statutory requirement.

Conclusion: The rectification order and the intimation were quashed. The petitioner was entitled to proceed before the authority for rectification after complying with the direction to communicate the court's order.

Ratio Decidendi: A rectification that enhances assessment or otherwise increases tax liability cannot be sustained unless the assessee is given prior notice and a reasonable opportunity of hearing.

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