Rajendra Nath Mittal, J.
1. The following two questions of law have been referred for the opinion of this Court under Section 22 of the Punjab General Sales Tax Act, 1948 (hereinafter referred to as the Act), at the instance of the assessee:
(1) Whether, in the facts and circumstances of the case, the dealer can be said to have been granted reasonable opportunity of being heard ?
(2) Whether the assessment order could be validly framed beyond and in excess of terms proposed in the memorandum/notice dated 19th October, 1970
2. Briefly, the facts giving rise to this reference are as follows. The assessee is a registered dealer under the Act. From 1st April, 1969, to 31st March, 1970, it submitted quarterly returns for the four quarters declaring gross sales at Rs. 1,34,586.87 and claimed deductions of the following amounts :
(i) Sales of tax-free goods Rs. 16,887.32
(ii) Sales made to registered dealers Rs. 63,405.12
(iii) Deduction under Section 5(2)(b) Rs. 872.72
3. On 27th May, 1970, the Assessing Authority issued notice of assessment to the assessee for 10th June, 1970, on which date Shri Ram Singh, father of Shri Inderjit Singh, appeared and sought an adjournment to 18th June, 1970. On the adjourned date Shri Ram Singh again appeared and the case was partially examined in his presence. It was then adjourned to 24th June, 1970. On that date again Shri Ram Singh appeared and his pocket diary was seized by the Assessing Authority and it also recorded his statement. After doing so, it doubted the sales made to M/s. Om Parkash and Sons of Amritsar and required the dealer to prove the genuineness of sales made in its favour. The case was adjourned to 7th July, 1970.
4. On 7th July, 1970, Inderjit Singh appeared and he made a request for summoning M/s. Om Parkash and Sons for 3rd August, 1970. The said firm could not be served for that date and the proceedings were adjourned to 18th August, 1970. Thereafter, the proceedings were adjourned on various dates.
5. On 19th October, 1970, the Assessing Authority addressed a notice to the assessee stating that the entries of Rs. 26,453.42 recorded in the diary did not find place in the books of account produced by the assessee. It also asked the assessee to explain as to why the account books be not rejected and the assessment be framed on best judgment basis. The assessee was further asked to explain as to why penalty under Section 10(7) of the Act be not imposed. It was also pointed out that the assessee had shown sales of Rs. 33,724.82 to M/s. Brij Bhushan Jai Gopal, Amritsar, which firm had closed business and no return for the year 1969-70 had been filed by it. It was next pointed out that M/s. Om Parkash and Sons had denied the purchases and stated to have signed the declaration on receipt of remunerations at the rate of 4 annas per Rs. 100. The assessee was asked to prove the factum of sale to the abovesaid parties. The assessee was asked to appear on 27th October, 1970, which was declared a holiday. A fresh notice for appearance on 27th November, 1970, was issued to the assessee which was served upon it in the evening on 26th November, 1970.
6. On 27th November, 1970, no one appeared on behalf of the assessee before the Assessing Authority. Consequently, it framed a best judgment assessment and determined the turnover of the assessee at Rs. 1,51,040.29. The claim of deductions with regard to sale of tax-free goods was repelled on the ground that the assessee had not produced the account books to prove the claims. Regarding sales made to the registered dealers, the Assessing Authority did not feel satisfied in respect of sales made to M/s. Om Parkash and Sons and M/s. Brij Bhushan Jai Gopal and regarding the remaining sales it observed that no declaration in respect of sales made to registered dealers had been furnished. The claim of the assessee under Section 5(2)(b) of the Act was declined with the observations that the assessee had not produced its account books and consequently the claim could not be ascertained. It also imposed a penalty of Rs. 4,000 under Section 10(7) of the Act against the assessee.
7. The assessee went up in appeal before the Deputy Excise and Taxation Commissioner, Jullundur, who, vide his order dated 21st July, 1972, upheld the assessment order and dismissed the appeal in entirety. It held that proper opportunity of being heard was given to the assessee and the Assessing Authority was justified in framing the ex parte assessment. The assessee having felt aggrieved against the order of the Deputy Excise and Taxation Commissioner filed second appeal before the Sales Tax Tribunal, Punjab, Chandigarh, which modified the order of the appellate authority to the extent that it reduced the penalty from Rs. 4,000 to Rs. 2,000. In other respects, it maintained the order of the appellate authority. On . the application of the assessee the abovesaid two questions of law have been referred for the opinion of this Court.
8. It is contended by Mr. Bhagirath Dass, the learned counsel for the petitioners, that the notice dated 19th October, 1970, by which the assessee was directed to explain the entries in the diary seized from Shri Ram Singh and prove the purchases by M/s. Om Parkash and Sons and M/s. Brij Bhushan Jai Gopal as the former firm had denied the purchases from the assessee during the assessment year 1969-70 and the latter firm had since closed the business and no return was filed by it relating to the said assessment year was served late in the evening on 26th November, 1970 and the case was fixed for 27th November, 1970, on which date ex parte proceedings were taken. According to him, in this situation it cannot be said that an adequate opportunity was given to the assessee to represent its case before the Assessing Authority. On the other hand, it has been contended by the learned counsel for the department that prior to 26th November, 1970, the assessee knew about the irregularities in its accounts and had been given an opportunity to explain the same. According to him, it cannot be said that the assessee has not been given adequate opportunity merely because the notice dated 19th October, 1970, was served a day prior to the date of hearing.
9. We have heard the learned counsel for the parties at a considerable length and given due consideration to their arguments. It is well-settled that before any material collected by the Assessing Authority against the assessee is used against him, the latter should be given adequate opportunity to rebut the same : see  28 STC 148 Atul Glass Industries, Faridabad v. State of Haryana. In view of the settled position of law, the Assessing Authority served a notice dated 19th October, 1970, on the assessee. Otherwise, it could not use the material collected by it against the assessee. The fact that the assessee had appeared earlier and knew that some material was to be used against it is of no use if such notice was served earlier. Admittedly, the notice was served on the evening of 26th November, 1970, whereas the case was fixed for 27th November, 1970. The date for which the notice was served earlier was declared to be a holiday and the petitioner was supposed to attend the office of the Assessing Authority on that date. According to the notice, the assessee had to | prove the genuineness of the transactions in favour of M/s. Om Parkash and Sons and M/s. Brij Bhushan Jai Gopal and had further to explain the entries in the diary seized from Shri Ram Singh, father of the proprietor of the assessee-firm. The assessee did require some time to prove all the facts.
10. After taking into consideration all the facts and circumstances of the case, we are of the opinion that the assessee was not given reasonable opportunity of being heard. Therefore, we answer question No. (1) in the negative, that is, in favour of the assessee and against the department. The Assessing Authority may, however, proceed to make assessment in accordance with law. In view of the reply to question No. (1), question No. (2) does not arise. No order as to costs.
Surinder Singh, J.
11. I agree.