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PETITIONER: STATE OF KERALA

       Vs.

RESPONDENT: M/S. VIJAYA STORES

DATE OF JUDGMENT01/09/1978

BENCH: TULZAPURKAR, V.D. BENCH: TULZAPURKAR, V.D. BHAGWATI, P.N. PATHAK, R.S.

CITATION:  1979 AIR  355            1979 SCR  (1) 538  1978 SCC  (4)  41

ACT:      Kerala General  Sales Tax  Act 1963-Section 39(4)-Scope of-Appellate Tribunal-If  possesses jurisdiction or power to enhance assessment  in the  absence of  an appeal  or cross- objection by one of the parties.      Section 39(4)  (a) (i)  of the Kerala General Sales Tax Act 1963  provides that  in  disposing  of  an  appeal,  the Appellate  Tribunal,   may,  after   giving  the  parties  a reasonable opportunity of being heard either in person or by a representative  confirm,  reduce,  enhance  or  annul  the assessment or penalty or both.

HEADNOTE:      On the  ground that 50% of the transactions recorded in a rough  note-book detected  and seized  by  the  Inspecting officer from the Head office of the firm were not entered in the regular  books of  accounts maintained  by the assessee, the Sales  Tax officer  made  an  addition  of  10%  to  the admitted turnover and completed the assessment.      In an  appeal, the  Appellate  Assistant  Commissioner, reduced the addition to 5% of the admitted turnover.      The respondents  preferred a  second appeal  before the Appellate Tribunal.  But the  Department  neither  filed  an appeal  against   the  order   of  the  Appellate  Assistant Commissioner  nor   raised  any   cross-objections  in   the assessee’s appeal  After issuing  a show-cause notice to the assessee, the  Tribunal, under  section 39(4)  of the Kerala General Sales  Tax Act  1963, directed  the  addition  of  a certain amount to the taxable turnover.      In its  Tax Revision Petition, the respondent contended before the  High Court  that the  order of  the Tribunal was wrong in that it had no jurisdiction or power to enhance the assessment in  the absence  of an appeal or cross-objections by the  Department. Setting  aside the impugned order of the Tribunal the  High Court  remanded the  case for hearing the appeal afresh.      In appeal  to this  Court, the  appellant  (Department) contended that  on a  true construction  of section 39(4) of the Act,  the  Appellate  Tribunal  should  be  regarded  as possessing the  power to  enhance the assessment even in the absence of  any appeal or cross-objections by the Department

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against the Appellate Assistant Commissioner’s order.      Dismissing the appeal ^      Held:           (1)  The Tribunal  has no jurisdiction or power to                enhance the  assessment in  the absense of an                appeal   or.    cross-objections    by    the                Department. [543 E]           (2)  To accept  the  construction  placed  by  the                counsel  for  the  appellant  on  sub-section                (4)(a)(i)  would  be  really  rendering  sub-                section (2 of section 39 otiose, for if in an                appeal preferred by the assesses against, the                Appellate Assistant Commissioner’s order, the                tribunal would  have the power to enhance the                assessment, a  provision for cross-objections                by the  Department  was  really  unnecessary.                [1543 D] 539           (3)  The elementary principle found in the Code of                Civil Procedure  that the  respondent who has                neither preferred  his own  appeal nor  filed                cross-objections in  the appeal  preferred by                the appellant  must be deemed to be satisfied                with the  decision of the lower authority and                that he  will not  be entitled to seek relief                against a  rival party in an appeal preferred                by  the  latter,  is  equally  applicable  to                revenue proceedings.[543 G]      Motor Union  Insurance Co.  Ltd.  vs.  Commissioner  of Income Tax  Bombay (1945)  13 ITR  272 and  New  India  Life Assurance Co. vs. Commissioner of Income Tax, Excess Profits Tax, Bombay City. (1957) 31 ITR 844 approved.      Commissioner  of   Sales  Tax,   orissa  vs.  Chunnilal Parmeshwar Lal (1961) 12 STC 677 distinguished.

JUDGMENT:      ClVlL APPELLATE  JURISDICTION: Civil  Appeal No. 477 of 1976.      Appeal by  Special Leave  from the  Judgment and  Order dated 11-4-1975 of the Kerala High Court in T.R.C. No. 59 of 1973.      P. A. Francis and N. Sudhakaran for the Appellant.      Exparte against the Respondent.      The Judgment of the Court was delivered by      TULZAPURKAR,  J.-The  short  question  raised  in  this appeal by  special leave  is whether  the Appellate Tribunal has power  under s.  39(1) of  the Kerala  General Sales Tax Act, 1963  to enhance  the assessment  in the absence of any appeal or cross-objections by the Revenue ?      The respondent firm (M/s. Vijaya Stores) is a dealer in stationery having  its head office at Cochin and branches at Ernakulam and  Kottayam. For the assessment year 1965-66 the respondent  firm   returned  a   total   turnover   of   Rs. 25,54,974.58 and  a net  taxable turn-  over, after claiming exemptions, of  Rs.  12,99,996.49.  The  Sales  Tax  officer rejected the  Book results  on the basis of certain material gathered from  a rough  note-book detected and seized by the Inspecting officer  from the  Head office  at Cochin; it was found that  about 50%  of the  transactions recorded in that rough note-book  were  not  entered  in  the  regular  books maintained  by   the  assessee;   the  Sales   Tax  officer, therefore, made  an addition  of 10%  (Rs. 45,654.73) to the

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admitted  turnover   of  the  Cochin  shop  and  accordingly completed the  assessment by  his order  dated  January  16, 1967. In  an appeal  preferred by the respondent-firm to the Appellate Assistant Commissioner, the assessee raised a two- fold contention  that the  rejection  of  accounts  was  not justified and  that the  addition made  on the  basis of the rough note-book  was excessive  and arbitrary. The Appellate Assistant Commissioner  by his  order dated November 1, 1968 negatived the first contention and 18-526 SCI/78 540 as regards  the second  he gave  relief to  the assessee  by reducing and  limiting the addition to 5% (Rs. 22,823.00) of the admitted  turnover of the Cochin shop. Against the order of the Appellate Assistant Com missioner the respondent firm preferred  a   second  appeal  to  the  Appellate  ’Tribunal challenging the  addition of  5% to the taxable turnover. No appeal nor any cross-objections were filed by the Revenue to the  Tribunal  against  the  said  order  of  the  appellate Assistant Commissioner.  The Appellate  Tribunal was  of the view that  the Sales Tax officer and the Appellate Assistant Commissioner had  no reason  to make  addition at any figure less than  Rs. 80,218.22 as was seen from the detected rough note-book; the  Tribunal, therefore,  by invoking  the power under s.  39(4) of  the Act issued notice to the assessee to show cause  against the proposed enhancement of the turnover and after  hearing the  objections of  the assessee  by  its order dated  May 10,  1973 directed  an addition of a sum of Rs. 80,218.22  to the  taxable turnover. The respondent-firm preferred a  Tax Revision Petition (being T.R.C. 59 of 1973) to the Kerala High Court contesting that the Tribunal had no jurisdiction or  power to  enhance  the  assessment  in  the absence of  an appeal  or cross-objections by the Department and prayed  for quashing of the order. The Kerala High Court by its  judgment and  order dated April 11,1975 accepted the contention of the respondent-firm and set aside the impugned order of  the Tribunal and remanded the case for hearing the appeal of  the assessee afresh in accordance with law and in the light  of what  it had said in its judgment; in doing so the High  Court relied upon two decisions of the Bombay High Court in  Motor Union Insurance Co., Ltd. v. Commissioner of income Tax,  Bombay(i) and New India Life Assurance Co. Ltd. v. Commissioner  of Income-Tax,  Excess Profits  Tax, Bombay City(2). The  State of  Kerala has come up in appeal to this Court.      Counsel for  the appellant  raised two  contentions  in support of  the appeal.  He first  contended that  on a true construction of  s. 39(4)  of the Act the Appellate Tribunal should be  regarded as  possessing the  power to enhance the assessment in  the absence of any appeal or cross objections by  the  Department  against  the  Appellate  Assistant  Com missioner’s order  and  that  the  only  requirement  before making such enhancement was to give a reasonable opportunity of being  heard against  the proposed  enhancement which the Appellate Tribunal  had done  in  this  case;  secondly,  he contended that s. 39(4) of the Kerala General Sales Tax Act, 1963 was  not in  pari materia  with s.  33(4) of the Indian Income Tax  Act, 1922,  and, therefore, the High Court ought not to  have relied  upon the  decisions of the Bombay  High Court      (1) [1945] 13 I. T. R. 272.      (2) [1957] 31 l.T.R. 844. 541 rendered under  s. 33(4) of the Indian Income Tax Act, 1922. He A also pressed the contrary view taken by the Orissa High Court in  the case  of Commissioner  of Sales Tax, Orissa v.

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Chunilal Parameshwar  Lal(l), for  our acceptance.  For  the reasons which we shall presently indicate it is not possible to accept  either of  these contentions urged by counsel for the appellant. B        The  question raised  before us really turns upon the correct interpretation  to be placed on s. 39(4) of the Act, but sub  ss. (1), (2), (3) and (4) of s. 39 are material for our purposes which run thus:      "39. Appeal to the Appellate Tribunal.      (1)  Any officer  empowered by  the Government  in this      behalf or any other person objecting to an order passed      by  the  Appellate  Assistant  Commissioner  under  sub      section (3)  of section  34 and any person objecting to      an  order  passed  by  the  Deputy  Commissioner  under      subsection (1)  of section 35, and any person objecting      to  an   order  passed   by  the  inspecting  Assistant      Commissioner under  clause (c)  of sub-section  (4)  of      section 28  may, within a period of sixty days from the      date on which the order was served on him in the manner      prescribed, appeal  against such order to the Appellate      Tribunal;                Provided that  the  Appellate  ’Tribunal  may admit an  appeal presented  after the expiration of the said period if  it is satisfied that the appellant had sufficient cause t‘or not presenting the appeal within the said period.      (2)  The officer  authorised under  sub-section (1)  or           the  person   against  whom  an  appeal  has  been           preferred, as the case may be on receipt of notice           that an  appeal against the order of the Appellate           Assistant Commissioner  has been  preferred  under           sub-section  (1)   by  the   other   party,   may,           notwithstanding that  he has  not appealed against           such order  or any  part thereof,  file,    within           thirty days  of the  receipt of the notice, a memo           random  of   cross-objections,  verified   in  the           prescribed  manner   against  any   part  of   the           appellate   Assistant   Commissioner,   and   such           memorandum shall  be disposed  of by the Appellate           Tribunal as  if it were an appeal presented within           the time specified in sub- section ( 1 ) .      [1961] 12 S.T.C. 677. 19-526 SCI/78 542      (3)  The appeal  or the  memorandum of cross-objections           shall be  in the  prescribed  form  and  shall  be           verified in  the prescribed  manner, and,  in  the           case of  an appeal  preferred by  any person other           than an officer em powered by the Government under           sub-section (1),  it shall  be accompanied by such           fee not  exceeding one  hundred rupees  as may  be           prescribed.      (4)  In disposing  of an appeal, the Appellate Tribunal           may,  after   giving  the   parties  a  reasonable           opportunity of being head either in person or by a           representative.           (a) in  the case  of an  order  of  assessment  or                penalty.                (i)  confirm, reduce,  enhance or  annul  the                     assessment or penalty or both;                (ii) set aside  the assessment and direct the                     asses sing  authority to  make  a  fresh                     assessment after such further enquiry as                     may be directed; or                (iii)pass such  other orders  as it may think                     fit; or

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         (b)  in the  case of  any  other  order,  confirm,                cancel or vary such order."        Considerable  emphasis was  laid by  counsel for ’the appellant upon  sub-s.(4) which  indicates what  things  the Appellate Tribunal  may do  while disposing of an appeal and in particular it was pointed out that under ’sub-s.(4)(a)(i) the Appellate  Tribunal has been given power ’to enhance the assessment" while disposing of an appeal against an order of assessment after  giving the  party a reasonable opportunity of being  heard and  it was  urged that  such power could be exercised  even   when  the  appeal  against  the  Appellate Assistant Commissioner’s assessment order had been preferred by the  assessee and  not by the Department. To place such a construction on  sub-s. (4)(a)(i)  would amount  to ignoring the scheme of s. 39. Sub-s. (1) provides for an appeal being preferred  against   an  assessment   order  passed  by  the Appellate Assistant  Commissioner under  s. 34(3)  either by the  assessee  or  by  the  Department  through  an  officer empowered by  the Government in that behalf. Further, sub-3. (2) provides  for filling  of cross-objections  by a  party, against whom  an appeal  has been preferred, notwithstanding that he has not himself appealed against the decision or any part thereof and such cross-objections are to be disposed of by Appellate  Tribunal as  if it  were an appeal. Then comes sub-s. (4)  which enumerates  the various  powers  conferred upon 543 the Appellate  Tribunal  while  disposing  of  such  appeals (including cross-objections)  and the  power conferred  upon the Appellate  Tribunal under  s. 4(a)  (i) is  "to confirm, reduce, enhance  or annul  the  assessment";  the  power  to enhance  the   assessment  must  be  appropriately  read  as relatable to  an appeal  or cross-objections  filed  by  the Department. The  normal rule that a party not appealing from a decision must be deemed to be satisfied with the decision, must be taken to have acquiesced therein and be bound by it. and, therefore,  cannot seek relief against a rival party in an appeal  preferred by  the latter,  has not  been deviated from in  sub-s.(4)(a)(i)  above.  In  other  words,  in  the absence of  an appeal  or cross-objections by the Department against the  Appellate Assistant  Commissioner’s  order  the Appellate Tribunal  will have  no jurisdiction  or power  to enhance the  assessment. Further, to accept the construction placed by  the counsel for the appellant on sub-s. (4)(a)(i) would be really rendering sub-s. (2) of s. 39 otiose, for if in an appeal preferred by the assessee against the Appellate Assistant Commissioner’s  order the  tribunal would have the power to  enhance the  assessment, a  provision  for  cross- objections by  the Department was really unnecessary. Having regard to the entire scheme of s. 39, therefore, it is clear that on a true and proper construction of sub-s. (4) (a) (i) of s.  39 the  Tribunal has  no  jurisdiction  or  power  to enhance the assessment in the absence of an appeal or cross- objections by the Department.      It is true that the two Bombay decisions reported in 13 I.T.R. 272 and 31 I.T.R. 844 (supra) on which the High Court has relied  ‘have been  rendered in  relation to s. 33(4) of Indian Income  Tax Act,  1922  but  in  our  view  the  said provisions of  Income Tax  Act is  in pari  materia with the provision of  s.39(4) of  the Kerala General -Sales Tax Act, 1963. Moreover,  the Bombay  High Court  has pointed  out in those decisions  that s.  33(4) merely  enacted what was the elementary principle  to be  found in  Civil Procedure  Code that the respondent who has neither preferred his own appeal nor filed  cross-objections in  the appeal  preferred by the

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appellant, must  be deemed to be satisfied with the decision of the  lower authority  and he will not be entitled to seek relief against  a rival  party in an appeal preferred by the latter.  In   the  first   mentioned  case   the  elementary principle is stated at page 282 of the report thus:              "Apart from statute, it is elementary that if a      party appeals,  he is  the party  who comes  before the      Appellate Tribunal  to redress  a grievance  alleged by      him. If  the other  side has  any grievance,  he has  a      right to file a cross-appeal 544      or cross-objections.  But if no such thing is done, the      other party, in law, is deemed to be satisfied with the      decision. He  is, of  course, entitled  to support  the      judgment of  the first  officer on  any ground  open to      him, but  he is not entitled to raise a ground so as to      work adversely to the appellant and in his favour."        As  regards the  decision of the Orissa High Court in Commissioner of  Sales Tax,  Orissa v.  Chunnilal Parmeshwar Lal (supra),  the same  cannot avail  the appellant  for the decision in  that case  was rendered on a concession made by the assessee’s counsel.        In  the result we are clearly of the opinion that the High Court  was right  in the  view it  took and the appeal. therefore, fails  and is dismissed. Since the respondent has not appeared, there is no question of any costs N.V.K.                                     Appeal dismissed. 545