1981 PLP 656 (SCMR)

NASIM HASAN SHAH, J.-This petition is directed against the order of the Lahore High Court passed on 18-2-1976 whereby the question referred to it by the Income-tax Tribunal (to be mentioned in the sequel) was answered in the affirmative. This case arises out of the assessment to income-tax of the Lucky Stores and zubair Medical Stores, Lahore Cantonment for the years 1961-62 and 1962-63. Muhammad Tufail, who is an individual and is the sole proprietor of Lucky Stores, is also managing the concern Zubair Medical Stores which is owned by his son Muhammad Zubair, who is deaf and dumb. Muhammad Tufail was assessed upto the assessment year 1959-60 on the income of Messrs Lucky Stores in his individual capacity. However, for the assessment year 1960-61 the Income-tax Officer considering that both the business of Lucky Stores and Zubair Medical Stores were owned and run by Muhammad Tufail filed an appeal before the Appellate Assistant Commissioner and the Assistant Commissioner concerned dismissed it but when the matter went up before the Appellate Tribunal the assessment was, however, set aside. For the assessment years 1961-62 and 1962-63, the Income-tax Officer again clubbed the income of the two concerns on the same ground as those which appealed to the Income-tax Officer while making assessment for the year 1960-61. Against these orders two separate appeals were preferred to the Appellate Assistant Commissioner, who by his common order dated 8-9-1967, held that the clubbing was not justified and directed the Assessing Officer to assess the two incomes separately. The Department went up in appeal to the Income-tax Tribunal. Before it, it was argued that the source of capital of Zubair Medical Store was the money given by Muhammad Tufail. On the other hand it was contended on behalf of the respondent that the capital had come from the grand-mother of Muhammad Zubair. The peti tioner rebutted this contention with the plea that the grand mother had no source of income of her own. He further submitted that one of the employees of Muhammad Tufail, who was looking after Lucky Stores, was also looking after the Zubair Medical Stores which showed that the Management was also the same. It was further contended before the Tribunal that the return of income for Zubair Medical Stores was also filed by Muhammad 'Tufail. Thus, the three factors of invest ment, Management and control established that Muhammad Tufail was the owner of the two concerns. The respondent, however, submitted that in the Martial Law declaration the capital investment of Zubair Medical Stores was shown as gift by the minor's grand-mother and the case was processed as such. The Tribunal upheld the orders of the Assistant Commissioner observing that, no doubt, the Appellate Assistant Commissioner had observed in his order that the Income-tax Officer had based his judgment on his findings about the source of investment Management and control of the business and the signatures on the returns etc. but these facts were not fresh or new and accordingly on the principles of res judicata different decision from that given re the earlier assessment could not be given. Accordingly, the finding that the income of the two concerns could not be clubbed together was found to be correct in these circumstances. The present petitioner then sought a reference on the question of law involved in the case to the High Court, namely: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding on the principle of res judicata that the income of the two concerns could not be clubbed and charged to tax in the hands of the assessee-respondent in respect of the assessment year 1961-62?" (It Should be 1961-62 and 1962-63). The reference was heard by the Division Bench of the High Court on 18-2-1976 which answered the question in the affirmative in doing so, it relied on a decision of this Court in Commissioner of Income-tax, East Pakistan Dacca v. Wahid-uz-zaman (PLD 1965 SC 171). Sh. Abdul Haque learned counsel for the petitioner has submitted that under the Income-tax Act every year of assessment is a distinct unit to be treated as such and not to be connected with the earlier or subsequent years that the learned Judges in the High Court had misconstrued the ratio of the judgment of this Court in the case of Wahiduzzaman and that in any case the rule of partial res judcata which was laid down by this Court in the said case was not attracted. We are not inclined to agree with these submissions. This Court had found that the principles of res judicata could be applied in relation to cases before the income-tax authorities subject to certain limitations which were set out as under :

" .Under the circumstances the ends of justice will be served by confining the bar of res judicata in relation to decisions of Income-tax Authorities to cases where the decision is not clearly open to some objection. It should be a decision which is reached after properly enquiry which is such as could reasonably have been reached on the material before the authority, and which does not suffer from such a defect as would render it liable to be set aside under section 100, C. P. C. in second appeal if it was a decision of a civil Court. Also a matter can always be re-opened on the ground that fresh evidence having a material bearing on the point decided is avail able." As the High Court has observed in the present case that no new material had become available to the Income-tax authorities nor had it become seized of fresh evidence having a material bearing on the point before them, which was not available to the Income-tax Officer and had not been adverted to by him when the case for 1959-60 was disposed of. Hence the rule of res judicata was in the circumstances attracted in the present case. This petition must, therefore, fail and is accordingly, dismissed hereby. Petition dismissed.