Appellate duty to decide on merits barred a fresh assessment order where the foundational books-rejection issue was left undecided.

An appellate authority must decide an assessee's appeal on merits and cannot direct a fresh assessment without first adjudicating the foundational dispute. The Tribunal failed to examine whether rejection of the books of account was justified and instead remanded the matter for reassessment, even though the turnover issue could arise only after that threshold question was decided. The order was therefore unsustainable, the revision was allowed, the impugned order was set aside, and both appeals were remitted to the Tribunal for fresh decision on merits.

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Issues: Whether the Tribunal was bound to decide the assessee's appeal on merits and whether the impugned order, which directed a fresh assessment without adjudicating the rejection of the books of account, could be sustained.

Analysis: The assessee was entitled as a matter of law to a decision on the merits of his appeal. The Tribunal did not decide whether the rejection of the books of account was justified and instead directed a fresh assessment. Since the question of turnover could arise only after deciding the validity of the rejection of accounts, the Tribunal failed to discharge its appellate duty.

Conclusion: The order of the Tribunal could not stand. The revision was allowed, the impugned order was set aside, and the Tribunal was directed to decide both appeals afresh on merits.

Final Conclusion: The assessee succeeded because the appellate authority's failure to adjudicate the appeal on merits required the matter to be sent back for fresh decision.

Ratio Decidendi: An appellate authority must decide an appeal on merits and cannot dispose of it by directing a fresh assessment without first adjudicating the foundational issue in dispute.

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