Case: State Of Kerala Vs. M/S. Vijaya Stores

m (M/s. Vijaya Stores) is a dealer in stationery having its head office at Cochin and branches at Ernakulam and Kottayam. For the assessment yearrm returned a total turnover of Rs. 25, 54, 974.58 and a net taxable turnover, after claiming exemptions, of Rs. 12, 99, 996.49. The STO rejected the book results on the basis of certain material gathered from a roughdetected and seized by the Inspecting Officer from the head office at Cochin; it was found that about 50% of the transactions recorded in that roughwere 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 admitted turnover of the Cochin shop and accordingly completed the assessment by his order dated January 16, 1967. In an appeal preferred by theto the AAC, the assessee raised acontention that the rejection of accounts was not justified and that the addition made on the basis of the roughwas excessive and arbitrary. The AAC by his order dated November 1, 1968, negatived the first contention and as regards the second he gave relief to the assessee by reducing and limiting the addition to 5% (Rs. 22, 823) of the admitted turnover of the Cochin shop. Against the order of the AAC, thepreferred a second appeal to the Appellate Tribunal challenging the addition of 5% to the taxable turnover. No appeal nor anywere filed by the revenue to the Tribunal against the said order of the AAC. The Appellate Tribunal was of the view that the Sales Tax Officer and the AAC had no reason to make addition at any figure less than Rs. 80, 218.22 as was seen from the detected roughthe 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. Thepreferred a Tax Revision Petition (being T.R.C. No. 59 of 1973) to the Kerala High Court contending that the Tribunal had no jurisdiction or power to enhance the assessment in the absence of an appeal orby 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 theand 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. CIT [1945] 13 ITR 272   and New India Life Assurance Co. Ltd. v. CIT [1957] 31 ITR 844.  The State of Kerala has come up in appeal to this court

Reasoning: For the reasons which we shall presently indicate it is not possible to accept either of these contentions urged by counsel for theplace such a construction on(4)(a)(i) would amount to ignoring the scheme of s. 39.(1) provides for an appeal being preferred against an assessment order passed by the AAC under s. 34(3) either by the assessee or by the department through an officer empowered by the Government in that behalf. Further,(2) provides for filing ofby a party, against whom an appeal has been preferred, notwithstanding that he has not himself appealed against the decision or any part thereof and suchare to be disposed of by the Appellate Tribunal as if it were an appeal. Then comes(4) which enumerates the various powers conferred upon the Appellate Tribunal while disposing of such appeals (includingand the power conferred upon the Appellate Tribunal under(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 orfiled 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(4)(a)(i) above. In other words, in the absence of an appeal orby the department against the AACs 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(4)(a)(i) would be really rendering(2) of s. 39 otiose, for if in an appeal preferred by the assessee against the AACs order, the Tribunal would have the power to enhance the assessment, a provision forby 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(4)(a)(i) of s. 39 the Tribunal has no jurisdiction or power to enhance the assessment in the absence of an appeal orby the departmentIt is true that the two Bombay decisions reported in [1945] 13 ITR 272   and [1957] 31 ITR 844 , on which the High Court has relied, have been rendered in relation to s. 33(4) of the Indian I.T. Act, 1922, but, in our view, the said provision of I.T. 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 the Civil Procedure Code that the respondent who has neither preferred his own appeal nor filedin the appeal preferred by the 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 as. 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 hisregards the decision of the Orissa High Court in CST v. Chunilal Parameswar Lal [1961] 12 STC 677 , the same cannot avail the appellant, for the decision in that case was rendered on a concession made by the assessees counsel.