The main legal point established in the judgment is that the Appellate Tribunal does not have the jurisdiction or power to enhance the assessment under S.39(4) of the Kerala General Sales Tax Act, 1963 in the absence of an appeal or cross-objections by the Department.

1. The short question raised in this appeal by special leave is whether the Appellate Tribunal has power under S.39(4) of the Kerala General Sales Tax Act. 1963 to enhance the assessment in the absence of any appeal or cross-objections by the Revenue?

2. 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 respondents firm returned a total turnover of Rs. 25,54,974.58 and a net taxable turnover, after claiming excemptions 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 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 as regards the second he gave relief to the assessee by reducing and limiting the addition to 5%

(22,823.00) of the admitted turnover of the Cochin shop. Against the order of the Appellate Assistant Commissioner 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-objection 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 turn-over 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 contending 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 judgement; 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 (1945) 13 ITR. 272 and New India Life Assurance Co. Ltd. v. Commissioner of Income-Tax, Excess Profits Tax Bombay City (1957) 31 ITR. 844. The State of Kerala has come up in appeal to this Court.

3. 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 Commissioner'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 thi