M.C. Jain, J. - (1.) ON a direction by this court on November 15, 1968, in D.B. Income-tax Cases Nos. 7, 8 and 9 of 1968, the Income-tax Appellate Tribunal, Jaipur Bench, has referred the following question of law for the opinion of this court: "Whether, in the circumstances of the case, the Income-tax Appellate Tribunal, Bombay Bench 'B', Bombay, was justified in law in departing from the previous finding of the Income-tax Appellate Tribunal, Delhi Bench 'C', New Delhi, dated October 14, 1963, that the firm of M/s. Manaklal Porwal of Udaipur was not a genuine firm and as such was not entitled to registration under the Indian Income-tax Act, 1922 ?"
(2.) WE may state a few relevant facts. Manaklal was an "A" class contractor and was carrying on the business of construction engineer for a number of years up to March 31, 1955. With effect from April 1, 1955, he entered into a partnership agreement with Shri Kalulal, Shri Amritlal and one Smt. Jatan Bai, each of them having 1/4th share in the profits and losses of the said firm. In respect of the assessment year 1956-57, an application was moved by the assessee-firm for registration on the basis of the partnership deed and for the assessment year 1957-58, an application for renewal of registration was also moved. Along with the application, the assessee-firm filed an application dated March 6, 1956, for registration of the firm to the Registrar of Firms, certificate of registration was obtained from the Registrar of Firms and an application was made to M/s. Apaj Navinchand & Co., Udaipur, for opening a credit account for supply of petrol. The Income-tax Officer examined Shri Kalulal, Shri Amritlal and Smt. Jatan Bai with a view to find out whether they were genuine partners of the firm. Shri Manaklal was not examined. The Income-tax Officer found that there is no specific proof that the proprietary business is converted into a partnership business. The orders of the Income-tax Officer were challenged in appeal before the Appellate Assistant Commissioner and before the Appellate Assistant Commissioner some more material was presented which was taken into consideration by the Appellate Assistant Commissioner. The assessee's claim for registration and for renewal of registration was, however, rejected. The assessee further appealed to the Income-tax Appellate Tribunal against the orders of the Appellate Assistant Commissioner. Before the Income-tax Appellate Tribunal, the assessee-firm produced further evidence in respect of its claim regarding the genuineness of the firm. Affidavits of five persons were produced and four certificates of engineers were produced. It may be mentioned that before the Appellate Assistant Commissioner, it was pointed out that the firm was dissolved on March 31, 1962, and a deed of dissolution was produced. The Tribunal, after considering the evidence on record including the additional evidence, held that the position has nowhere improved and that the assessee-firm failed to establish its claim for registration of the firm. An application was moved by the assessee under Section 66(1) of the Indian Income-tax Act, 1922, but it was rejected by the Tribunal. Thereupon the assessee-firm approached this court under Section 66(2). The assessee's application was rejected by this court on August 24, 1965. When the assessment for the assessment years 1958-59, 1959-60 and 1960-61 came up before the Income-tax Officer, the assessee produced the following additional evidence: 1. Letter dated September 5, 1957, addressed by Manaklal, as partner, to the Executive Engineer, Udaipur. 2. Letter dated September 17, 1962, from the Executive Engineer, Udaipur, forwarding true copies of certain documents filed in his office. 3. Application dated December 2, 1957, made to the State Bank of India, Dohad, for opening a current account in the name of the firm. 4. Letter dated September 8, 1961, separately addressed to the Executive Engineer, Udaipur, by Amritlal " for Associated Construction Co.," and by Kalulal, as partner "for M/s. Associated Construction Co.", forwarding an application " for registration of the said Associated Construction Co. as "A" class contractors." 5. Letter dated February 6, 1958, sent by Kalulal "for M/s. Manaklal Porwal" addressed to the Assistant Engineer, Bhilwara, in connection with the construction of a college building at Bhilwara. 6. Indent made by the Sub-Divisional Officer dated December 30, 1960, authorising the stores to be delivered to Kalulal. 7. Letter dated December 17, 1958, sent by Kalulal "for Manaklalji" addressed to Shri Man Thakur Saheb Shri Durga Singh Ji in connection with the supply of stones for the construction work of the college building at Bhilwara by M/s. Manaklal Porwal. 8. Letter dated August 2, 1962, by Habib Bhai Ramji Bhai addressed to Manaklal asking him to remind Kalulal, his partner, about the payment of Rs. 1,400 due to him. 9. Miscellaneous correspondence carried on with the Executive Engineer from October 12, 1957, on behalf of the firm, both by Kalulal and Amritlal. 10. Cross-examination of S. K. Mukerjee, Executive Engineer, by the Income-tax Officer, on February 4, 1964." Despite production of fresh evidence by the assessee, the Income-tax Officer as well as the Appellate Assistant Commissioner refused to grant registration to the firm in respect of these three years. The assessee then approached the Tribunal, The matter was heard by the Income-tax Appellate Tribunal, Bombay Bench "B". Taking into consideration the three criteria propounded by this court in its order dated August 24, 1965, the Tribunal came to the conclusion that the firm is a genuine one by its order dated December 5, 1966. Aggrieved by the order of the Tribunal, the Commissioner of Income-tax presented applications under Section 66(2) of the Indian Income-tax Act which were allowed and a direction was given as stated above on which the aforesaid question has been referred to this court for its opinion. Mr. B. K. Arora, learned counsel for the Revenue, submitted that the Income-tax Appellate Tribunal, Bombay Bench "B", departed from the previous finding arrived at earlier by the Income-tax Appellate Tribunal, Delhi Bench "C", New Delhi, It was not open to the Bombay Bench to take a different view of the matter and if different views are taken, it would create chaos and uncertainty, in respect of the two assessment years. Earlier it had been found that the assessee-firm was not a genuine firm and that matter stands concluded as it was finally decided by this court. It was not proper on the part of the Tribunal, Bombay Bench, to record a different finding. Mr. Arora referred to a decision of the Madras High Court in CIT v. L.G. Ramamurthi 1977 110 ITR 453. It was observed in that case as under (headnote at pp. 453, 454): "No Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another Bench of the same Tribunal on the same facts. It may be that the members who constituted the Tribunal and decided on the earlier occasion were different from the members who decided the case on the present occasion. But what is relevant is not the personality of the officers presiding over the Tribunal or participating in the hearing but the Tribunal as an institution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the Tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the officers manning the same Tribunal earlier on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence. The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over the courts or the tribunals and not reached objectively on the basis of the facts placed before the authorities. If a Bench of a Tribunal on identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself. That is the reason why in a High Court, if a single judge takes a view different from the one taken by another judge on a question of law, he does not finally pronounce his view and the matter is referred to a Division Bench. Similarly, if a Division Bench differs from the view taken by another Division Bench, it does not express disagreement and pronouce its different views, but has the matter posted before a fuller Bench for considering the question. If that is the position even with regard to a question of law, the position will be a fortiori with regard to a question of fact. If the Tribunal wants to take an opinion different from the one taken by an earlier Bench, it should place the matter before the President of the Tribunal so that he could have the case referred to a Full Bench of the Tribunal consisting of three or more members for which there is provision in the Income-tax Act itself. In the instant case, certain gifts made by members of a Hindu undivided family were held to be sham by the Tribunal. On a reference to the High Court, no specific question challenging the correctness of this finding was raised. In the subsequent assessment year, a differently constituted Tribunal came to a different conclusion. On a reference to the High Court at the instance of the Department: Held, that, in the absence of any fresh material, the Tribunal was not justified in coming to an entirely different and contrary conclusion on the same set of facts." He also referred to a decision of the Supreme Court in CIT v. Durga Prasad More 1971] 82 ITR 540. In that case, the assessee purchased certain house property on September 30, 1940, for Rs. 1,85,000. During the assessment for the assessment year 1942-43, the assessee claimed that the income from the property should not be taxed in his hands and in support thereof, he produced the deed of conveyance. The Tribunal rejected his claim leaving it open to the assessee to establish his case in subsequent assessment proceedings. During the assessment years 1942-43 to 1957-58, the income from those premises was assessed in his hands and for the subsequent two years, the assessee revived his plea and the Tribunal again rejected it, holding that the recitals were make-believe statements. On a reference to the High Court, it was held that the Tribunal was not right in holding that the property was not trust property. On appeal to the Supreme Court, the Supreme Court reversed the decision of the High Court on the ground that it could not be said that the finding of the Tribunal as to the unreality of the trust was not based on any evidence or was otherwise vitiated. It was further observed by their Lordships of the Supreme Court that though it was proved that neither the principle of res judicata nor the rule of estoppel was applicable to assessment proceedings, the fact that the assessee included the income of the premises in his returns for several years, after objecting to its inclusion in the year 1942-43, was a circumstance which the taxing authorities were entitled to take into consideration in the absence of any specific explanation, and it was also observed that no question of law arose out of the order of the Tribunal and the Tribunal was right in holding that the house proyerty was not trust property. It may be mentioned that their Lordships of the Supreme Court proceeded to consider the question as to whether the finding of fact arrived at by the Tribunal is in any way vitiated and it was held that it is not in any way vitiated and so no question of law arises. Reference was also made to the decision of the Madras High Courtin CIT v. Shri Agastyar Trust [1984] 149 ITR 609. In that case, it was observed that the principle of estoppel or res judicata cannot strictly apply to the decisions rendered in proceedings under the Income-tax Act, on a reference, they have a binding effect both on the assessee as well as on the Revenue, if the point on which the decision has been given is the same. It is well established that the decision on the question as to whether a certain trust is charitable or not, has nothing to do with the fluctuations in the income and that such questions, if decided by a court on a reference made to it, would be res judicata and the same question cannot be subsequently reagitated. It may be stated that in that case, this question was already considered by the Supreme Court as to whether the assessee would be entitled to exemption under Section 4(3) of the 1922 Act in East India Industries (Madras) P. Ltd. v. CIT [1967] 65 ITR 611, wherein the claim for deduction of the donation made to the assessee-trust was rejected by the Supreme Court on the ground that the assessee-trust could not be held to be entitled to the benefit of exemption under Section 4(3) because some of the objects of the trust were not charitable and the trustees had discretion to spend the income of the trust on charitable and non-charitable objects. It may be stated that the matter turns on the finding already arrived at by the Supreme Court as to whether the trust in question is a charitable one or not and so the question of exemption was based on the previous findings regarding the nature of the trust.
(3.) MR. K.C. Bhandari, appearing on behalf of the assessee, submitted that it is well established by a series of decisions of the Supreme Court that the findings arrived at in any previous year do not operate as res judicata nor the principle of estoppel is attracted. The findings arrived at earlier are not in any way binding or conclusive on the assessee as well as on the Revenue. He referred to the decision in ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC). The majority of the judges in that case held that under the Income-tax Act, a year is the unit of assessment. The decision of an Income-tax Officer given in a particular year does not operate as res judicata in the matter of assessments of the subsequent years. The jurisdiction of the Tribunals in the hierarchy created by the Act was no higher than that of the Income-tax Officer and it was also confined to the year of assessment. In M.M. Ipoh v. CIT [1968] 67 ITR 106, their Lordships of the Supreme Court observed as under (at p. 118): "The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment: the findings on questions of fact may be good arid cogent evidence in subsequent years, when the same question falls to be determined in another year, but they are not binding and conclusive." To the same effect is the observation made in New Jehangir Vakil Mills Co. Ltd. v. CIT [1963] 49 ITR (SC) 137 . It was observed in that case as under (at pp. 137 and 138 headnote): "The circumstance that in an earlier assessment relating to 1943, the assessee was treated as an investor did not estop the assessing authorities from considering, for the purpose of computation of the profits of 1944, as to when the trading activities of the assessee in shares began. Nor could it be said, because it was held that the trading activities began in 1943, that the assessment relating to the year 1943 was being reopened. What was being done was only to compute the profits of 1944, which the authorities were entitled to do, by finding out when the trading activity in shares began. In matters of taxation, there can be no question of res judicata. The decision given by an Income-tax Officer for one assessment year cannot affect or bind his decision for another year. Generally, the doctrine of res judicata or estoppel by record does not apply to such decisions." In CIT v. Brij Lal Lohia & Mahabir Prasad Khemka [1972] 84 ITR 273 (SC), certain gifts in favour of B and N were not accepted to be genuine for the assessment years 1945-46 and 1946-47, and ultimately the Supreme Court refused to interfere with that finding. In proceedings for the assessment years 1947-48 to 1951-52, considerable additional evidence was adduced, and the Tribunal, after taking into consideration the decision rendered in the earlier proceedings, came to the conclusion that the gifts were genuine. The Tribunal set out various circumstances. Their Lordships of the Supreme Court held that, on the facts, none of the circumstances taken into consideration by the Tribunal could be said to be irrelevant, the Tribunal's finding was not perverse and the finding being one of fact, it was not open to the High Court or the Supreme Court to interfere with it. It was also held that the fact that in the earlier proceedings, the Tribunal took a different view of the two gifts was not a conclusive circumstance ; the decision of the Tribunal reached in those proceedings did not operate as res judicata and there was a great deal more evidence before the Tribunal in the proceedings for the subsequent years. Mr. K. C. Bhandari also referred to the decision of this court in (D. B. Civil Sales Tax Case No. 85 of 1983), CTo v. Hindustan Radiator, decided on August 26, 1985, in which reliance has been placed on M.M. Ipoh's case [1968] 67 ITR 106 (SC) and on the decision in State of West Bengal v. Hind Tea Company P. Ltd. [1984] 57 STC 97 (Cal). It is not useful to multiply the authorities. It may be taken as an established rule of law that the decisions rendered in earlier proceedings under the Income-tax Act do not operate as res judicata in connection with the subsequent assessment years nor the question of estoppel arises. The decision rendered is a decision for that particular year. So far as the present case is concerned, we need not be guided by the broader proposition propounded, for, it may be stated that the Income-tax Appellate Tribunal, Bombay Bench "B", has not proceeded to determine the question solely on the basis of that evidence which had already been considered in connection with the assessments of previous two years up to the stage of the High Court. In the assessment proceedings for subsequent three years, the assessee-firm has examined additional evidence. The finding of the Bombay Bench is not only based on appreciation of evidence, which was already there earlier but along with that the Bombay Bench has taken into consideration the additional evidence furnished by the assessee. We have already catalogued the additional evidence while stating the facts in the beginning. The Bombay Bench proceeded to consider the question in the light of the criteria propounded by this court when the matter came up before this court in connection with the previous finding and after considering the additional evidence, , the Bombay Bench of the Tribunal found that Kalulal and Amritlal were acting as partners and they were working as such in the assessee-firm and besides that the Tribunal also took into consideration the withdrawals made by the three partners Kalulal, Amritlal and Smt. Jatan Bai. Withdrawals have been taken into consideration even after the period of all the three assessment years. If the subsequent circumstances throw light on the question in issue, then, in our opinion, legitimately those circumstances can be taken note of. There were substantial withdrawals in the subsequent years and on that basis, the Tribunal found that those withdrawals show that the partners have shared the profits. Thus, it is not a case where there was no fresh material or additional evidence. When any additional evidence or fresh material comes before the taxing authorities, then they can proceed to take into consideration that fresh material and thereafter arrive at the finding of fact. Even in CIT v. L.G. Ramamurlhi's case [1977] 110 ITR 453 (Mad), it was observed that a different finding could not be reached in the absence of fresh material. This shows that fresh material may warrant a different finding. In that case, the Tribunal proceeded on the basis that the matter was not viewed earlier in the proper perspective and there was no fresh material. So it can be said that when there is fresh material produced by the assessee warranting a different conclusion, then previous findings can be departed from although the broader proposition is that in assessment proceedings, the previous findings are generally not binding and conclusive both on the assessee as well as on the Revenue. It may be that on the fresh material, the same conclusion can be arrived at which was arrived at earlier but a different conclusion can also be arrived at if the material is such which may warrant a different conclusion, then that would be essentially a finding of fact and such finding of fact cannot be interfered with either by the High Court or by the Supreme Court. In our opinion, on the basis of the additional evidence, the Bombay Bench of the Tribunal was justified in law in having arrived at the conclusion to which it has arrived and such a finding of fact, in our opinion, is not in any way vitiated. Neither can it be said to be perverse nor can it be said to be based on any irrelevant consideration. ;