JUDGMENT
Kochu Thommen, J.
1. The assessee did not file his returns or produce his books of accounts for the years 1972-73 and 1973-74. No reply was sent by him to the pre assessment notice. In the circumstances, on the basis of a best judgment assessment, the tax payable by him in respect of chalk powder, distilled water, empty barrels and tins was determined by the Sates Tax Officer at Rs. 1,400 for the year 1972-73 and at Rs. 1,750 for the year 1973-74. The
assessee appealed against the orders. The Appellate Assistant Commissioner
held :
“Hence the ex parte assessments made by the Officer are found to be not in order. The appellant’s books of accounts were produced before me at the time of hearing of the appeals and they are found to be maintained in the regular course of business duly supported by bills. It is, therefore, only reasonable that the assessments are revised, accepting the appellant’s books of accounts for both years.
The assessments thus stand modified and the Sales Tax Officer is directed to modify the assessments accepting the appellant’s books of accounts for both (years) 1972-73 and 1973-74.”
2. The Department appealed against the order of the Appellate Assistant Commissioner contending that the appellate authority exceeded its jurisdiction in directing the assessing authority to modify the assessment on the basis of the entries in the books of accounts. According to the Department, what the appellate authority should have done was to remand the case for fresh disposal, according to law, which meant that the Sales Tax Officer would have had the discretion to accept or reject the entries in the books of accounts. The Tribunal, by majority, upheld the decision of the Appellate Assistant Commissioner.
3. The power of the Appellate Assistant Commissioner is specified under Section 34(3) of the Kerala General Sales Tax Act, 1963 which says :
"In disposing of an appeal, the Appellate Assistant Commissioner may, after giving the appellant a reasonable opportunity of being heard,-- (a) in the case, of an order of assessment or penalty - (i) confirm, reduce, enhance or annul the assessment or the penalty or both;
(ii) set aside the assessment and direct the assessing authority to make a fresh assessment after such further enquiry as may be directed ; or (iii) pass such other orders as he may think fit; or (b) in the case of any other order, confirm, cancel or vary such order : Provided that, at the hearing of any appeal against an order of the assessing authority, the assessing authority shall have the right to be heard either in
person or by a representative.
4. This section shows that the appellate authority has the power to confirm, reduce, enhance or annul the order of assessment or set aside the order and direct the assessing authority to make a fresh assessment after such further enquiry as the assessing authority may be directed to conduct. The appellate authority has all the powers specified under the section, and, in understanding the section, he must be considered to have all these incidental powers which lend aid to the power specified under the section.
5. Sub-section (3)(a)(i) authorises the appellate authority to confirm, reduce, enhance or annul the assessment. If he adopts that course, there is nothing more to be done by the assessing authority. His decision, subject to further appeal, is final. On the other hand, he may, as provided under Sub-section (3)(a)(ii), set aside the assessment and direct a fresh assessment after such enquiry as the assessing authority may be directed to conduct. In such a case, the matter is at large once again before the assessing authority, and it is for him to conduct the enquiry, as he is directed to conduct, and come to a fresh finding. Sub-clause (iii) of Clause (a) of Sub-section (3) contains the residuary power which says that the appellate authority may pass such other orders as he may think fit. All its incidental powers are probably taken in by that sub-clause.
6. The contention of the Department is that it was open to the Appellate Assistant Commissioner to put an end to all proceedings, subject, of course, to further appeal, by either confirming, reducing or enhancing or annulling the assessment. It was equally open to her to set aside the assessment and remit the case to the officer below for fresh disposal. She has done neither, for what she did was to restrict the discretion of the officer in advance by telling him to accept the books of accounts produced for the first time before the Appellate Assistant Commissioner and recompute the tax on the basis of the entries in those books.
7. There is much force in the contention of the Department that it was most improper for the appellate authority to have tied the hands of the assessing authority in advance and remitted the matter for fresh disposal. It would have been, in our view, more appropriate for the Appellate Assistant Commissioner either to exercise her power under Sub-clause (i) of Section 34(3)(a) of the Kerala General Sales Tax Act, 1963, or to remit the matter under Sub-clause (ii) of Section 34(3)(a) with freedom for the assessing authority to accept or reject the books of accounts and arrive at an assessment independently.
8. The assessee did not file the returns. He produced no books of accounts. Nor did he respond to the notice of the assessing authority. The Appellate Assistant Commissioner, however, accepted the explanation of the assessee for his failure to respond to the notice of the assessing authority or produce before him the books of accounts. But what the appellate authority could reasonably have done was to give a fresh opportunity to the assessee to be heard with reference to all the books and other documents which he wished to produce. But to have remitted the matter without freedom for the assessing authority to independently exercise his mind as to the correctness of the claim made by the assessee on the basis of his books was, to say the least, an improper exercise of power.
9. The Tribunal has affirmed the order of the Appellate Assistant Commissioner. The taxes determined are, as seen above, trifle. It would be, in our view,
sheer waste of time and money to direct a fresh enquiry. In the circumstances, while the law is clarified as stated above, we refrain from setting aside the order under challenge. The Tax Revision Cases are accordingly dismissed. No costs.