TMI Blog1955 (9) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Tribunal in respect of an order under section 25A in the assessment year 1941-42. It was claimed that the family assets had been partitioned between the coparceners of the family. The Tribunal by its order dated 29th January, 1952, held that the disruption of the family took place as on 16th April, 1938, as alleged by Hiralal A. Shah and allowed the appeal. The firm of Hiralal, Shantilal and Kantilal had also appealed to the Tribunal. The Tribunal's order reads as under : 7. . . . . . . The Department has taken the view that Mr. Hiralal represented the Hindu undivided family in this firm. We are of opinion that Mr. Hiralal was only Vasantlal's trustee. We have already held that the partition took place on 16th April, 1938. Relief consequential to this finding will now be given by the Income-tax Officer. It may be noted here that in the assessment year 1941-42 the Department had not accepted the partition. It had held that Hiralal A. Shah represented his Hindu undivided family in the firm. The question whether Hiralal represented himself individually as a partner or represented his minor son has not been discussed in the order of the Tribunal, tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this application is annexure ' F ', and forms part of the case. (6) Hiralal took active interest in the partnership. He had a general power of attorney from the firm. 5. A copy of the order of the Tribunal giving detailed reasons is annexure ' G ' and forms part of the case. 6. We refer the following question as framed by their Lordships : Whether in the circumstances of the case the Tribunal was justified in law in departing from its previous finding that Hiralal was trustee of the minor Vasantlal. 7. The case has been finalised after giving the parties a hearing. The Departmental Representative accepts the statement of the case and has no suggestions to offer. The assessee has made a number of suggestions. Some of the suggestions relating to the facts relied upon by the Tribunal have been given effect to. N. A. Palkhivala with S. P. Mehta, for the assessee. M. P. Amin (Advocate-General) with G. N. Joshi, for the Commissioner. JUDGMENT The Judgment of the Court was delivered by CHAGLA, C. J.- The assessee before us is the firm of H. A. Shah Co. and the assessment years are 1942-43, 1943-44, and 1944-45. It appears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been cited and before we look at them or consider them we might consider what is the principle of law involved in the question that has been raised for our consideration. A Court is prevented from coming to a different or contrary conclusion to the one arrived at by itself earlier mainly on the ground of res judicata or on the ground of estoppel by record. Courts of law have adopted this particular rule of res judicata in order to give finality to litigation and also to confer the characteristic of conclusiveness to its decision. Therefore, if a matter is litigated between parties and a decision is arrived at by a Court, that decision is binding between the parties and it is not open to either of the parties to reagitate the question covered by that decision. The first question that obviously arises is this. Does the principle of res judicata as we have just explained apply to Tribunals set up under the Indian Income-tax Act and dealing with assessments from year to year of assessees who come up before it ? The principle has been well stated by Hanworth, Master of the Rolls, in Commissioners of Inland Revenue v. Sneath (1932) 17 Tax Cas. 149 at 163) : The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come to a different conclusion to the one arrived at by that very Tribunal earlier without any limitation whatsoever, and we shall presently indicate what in our opinion are the limitations upon the right of an Income-tax Authority not to be bound by the earlier decision or the right to revise the earlier decision. If the first decision was not an arbitrary decision or a perverse decision, if the first decision was arrived at after due inquiry and if no fresh facts were placed before the Tribunal giving the second decision, would it still be open to the second Tribunal to come to a contrary conclusion ? Two or three different positions may arise. The first Tribunal may come to a particular decision on a construction of a particular document. Take this very case. The partnership deed referred to played an important part in the decision arrived at by both the Tribunals. If the first Tribunal took a particular view as to the construction of that document, would it be open to the second Tribunal, without more, to come to a different conclusion on the construction of that document ? In our opinion it would not be open to the second Tribunal to disturb the decision given by the first Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision is not arbitrary or perverse, if it had been arrived at after due inquiry, if no fresh facts are placed before the Tribunal giving the later decision and if the Tribunal giving the earlier decision has taken into consideration all material evidence. We should also like to sound a note of warning, especially with regard to a Tribunal like the Appellate Tribunal, that it should be extremely slow to depart from a finding given by an earlier Tribunal. Even though the principle of res judicata may not apply, even though there may be no estoppel by record, it is very desirable that there should be finality and certainty in all litigations including litigations arising out of the Income-tax Act. It is not a very satisfactory thing that an assessee should feel a grievance that one Tribunal came to one conclusion and another Tribunal came to a different conclusion and that the two conclusions are entirely inconsistent with one another. Therefore the second Tribunal must be satisfied that the circumstances are such as to justify it in departing from the ordinary principles which apply to all Tribunals to try and give as far as possible a finality and a conclusiveness to the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Assistant Commissioner and Commissioners of Income-tax, and it is Chapter 11-A which deals with the Appellate Tribunal which is not an Income-tax Authority. Therefore it is contended that although the principle of res judicata may not apply so far as an Income-tax Officer or the Appellate Assistant Commissioner is concerned, it should apply to a judicial Tribunal like the Appellate Tribunal which is not in any way under the control or authority of the Central Board of Revenue or the Income-tax Commissioner. In order to appreciate this argument we must consider what role does the Appellate Tribunal play under the Income-tax Act. It is clear that the Tribunal is a part of the machinery of assessment. It may be the final link in the sense that it is the final appellate authority on facts. But when the Income-tax Act sets up a complete comprehensive assessment machinery, the Income-tax Tribunal plays an important part in the machinery and it will be entirely erroneous to contend that the Income-tax Tribunal stands outside that machinery and has nothing to do with that machinery. The Advocate-General has drawn our attention to section 37 where the Income-tax Officer, the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter enquiry, proceeded to assess the assessee on a certain basis, though they may be entitled to reopen the enquiry, they cannot arbitrarily change the assessment simply on the ground that the succeeding officer does not agree with the preceding officer's finding. The position is just like the position of any two parties who have proceeded on a certain basis in their relations. It may be open to one party to reopen the matter. But if he wants to do so, there should be facts which would entitle him to do it. If fresh facts come to light which on an investigation would entitle the Income-tax Officer to come to a different conclusion from that of his predecessor we think he is entitled to reopen the question. But if there are no fresh facts it is difficult to see how he can arbitrarily go behind the finding of his predecessor. The same principles of natural justice or judicial dealing, which Courts impose upon Income-tax Officers, would prevent them capriciously setting aside the orders of their predecessors based on enquiry. Therefore, what is emphasised in this statement of the law is that the Full Bench of the Madras High Court limited the power of the Income-tax Authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on would entitle the officer to come to a conclusion different from the one previously reached ; (iii) in the absence of such circumstances, the Income-tax Officer cannot arbitrarily depart from the finding reached after due inquiry by his predecessor in office simply on the ground that the succeeding officer does not agree with the preceding officer's findings. Therefore, to apply the test of the Nagpur High Court, if the previous decision has not taken into consideration material evidence or material facts, can it be said of that previous decision that it was arrived at after due inquiry ? Then we have the judgment of the Allahabad High Court in Kamlapat Motilal v. Commissioner of Income-tax, U. P. ([1950] 18 I. T. R. 812) The Allahabad High Court was really dealing with the question of res judicata as applying to a decision of the High Court, a question which really does not arise for our decision, and what the learned Chief Justice laid down was that if any question of right or title which is not peculiar to the year of assessment has been decided by a competent Court, the decision may be treated as res judicata in subsequent years. Even if the question has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal considering revising the earlier decision, and in our opinion fresh circumstances is a much wider expression than merely fresh facts brought before the authority. Reference was also made to a judgment of the Patna High Court in Kaniram Ganpat Rai v. Commissioner of Income-tax, Bihar Orissa ([1941] 9 I. T. R. 332). The learned Judges of that High Court followed the decision of the Madras Full Bench and at page 337 this is what they state : It may be open to one party to reopen the matter. But if he wants to do so there should be facts which would entitle him to do it. If fresh facts come to light which on an investigation would entitle the Incometax Officer to come to a different conclusion from that of his predecessor we think he is entitled to re-open the question. But if there are no fresh facts, it is difficult to see how he can arbitrarily go behind the finding of his predecessor. It will be noticed that emphasis is placed by the learned Judges on the second decision being an arbitrary decision, but in our opinion even, if there are no fresh facts, if material facts have not been taken into consideration on the earlier occasion, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying to assess the assessee according to his view of the liabilities of the assessee. But according to Mr. Palkhivala when the matter comes before the Tribunal there is a lis, there are two parties to that lis-the Income-tax Officer on one side and the assessee on the other-and the decision of the Tribunal is a proper judicial decision in the same sense in which a Court would decide after hearing parties, and therefore we should not hesitate to apply the principle applicable to decisions of the High Court to the decisions of the Tribunal. If what Mr. Palkhivala says is true, then the same principle must apply to the decision of the Appellate Assistant Commissioner because whatever the position before the Income-tax Officer might be as far as the Appellate Assistant Commissioner is concerned he has a lis also to decide, he has also two parties to the lis, and he gives his decision after hearing both parties. To that Mr. Palkhivala's answer is that whereas the Appellate Assistant Commissioner is not an independent judicial Tribunal, the Appellate Tribunal is. Really, we fail to understand what the significance of the expression independent in this context is. We take it that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es a particular issue, that issue becomes conclusive with regard to the rights of parties between whom the issue was decided. But what we have to consider in this reference is entirely a different matter, and what we have to consider is the power of one Tribunal to revise or reopen a decision given by another Tribunal in a different assessment. Income-tax Tribunals deal with different assessments, and it could not be said that when the first Tribunal gave a decision the issue was at an end and the question could not be raised again, because when a fresh assessment came before the later Tribunal the question did arise but it arose in a different assessment. Therefore, the principle enunciated by Halsbury, though with respect perfectly correct with regard to special Tribunals dealing with specific issues, does not necessarily apply to a case of an Income-tax Tribunal which is dealing with the same question not in the same assessment but in a different assessment and here again the basic principle to which we have drawn attention earlier should be borne in mind that every assessment is a selfcontained assessment. Applying the principles to the facts of the case before us, really th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing this question on the specific facts and circumstances set out in the statement of the case. A notice of motion has been taken out by the assessee which has been argued by Mr. Palkhivala, and the notice of motion wants a supplementary statement of the case to be submitted by the Tribunal. The fresh facts which the assessee wants to be placed before us are the various documents which according to the assessee were placed before the first Tribunal and from that it is sought to be argued that the first Tribunal in coming to its decision carefully weighed all the materials before it. We do not understand how the facts that certain materials were before the Tribunal can help us to come to the conclusion that that Tribunal necessarily considered those materials. The only way to find out whether a Tribunal considered materials placed before it is by looking at the judgment of the Tribunal. It would neither be possible nor proper to enter into the minds of Judges who decide a particular case. The mind of the Judge is only apparent from his judgment and if in the judgment the Judge has not referred to material evidence or material documents as we said before, the only inference that c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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