Income-tax findings may be revisited in later years when earlier conclusions ignored material evidence and later records are fuller.

Income-tax assessments are separate for each year, so the strict rule of res judicata does not bind tax authorities in later years. A prior finding may nonetheless be departed from only when the earlier view was reached without material facts, was perverse or arbitrary, or the later record contains fuller and more relevant evidence on the same issue. On the facts described, the later Tribunal relied on partnership documents and registration materials not considered earlier, so departure from the prior finding was treated as justified.

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Issues: Whether the Tribunal was justified in law in departing from its earlier finding that Hiralal was a trustee for the minor Vasantlal.

Analysis: The applicable principle is that income-tax assessments are self-contained for each year and the strict rule of res judicata does not bind tax authorities in later years. However, an earlier finding cannot be reopened arbitrarily or capriciously. A later Tribunal may depart from a prior view where the earlier decision did not consider material facts, where the earlier conclusion was perverse or arbitrary, or where the later record contains more complete and relevant materials bearing on the same question. On the facts, the later Tribunal relied on partnership documents and registration applications that had not been referred to in the earlier order, and the statement of case showed that the earlier decision had been reached on less complete materials.

Conclusion: The Tribunal was justified in law in departing from its previous finding. The answer to the reference was in the affirmative, against the assessee and in favour of the Revenue.

Final Conclusion: A prior income-tax finding may be revised in a later assessment year where the earlier decision did not consider material evidence and the later conclusion is founded on fuller relevant materials; the earlier decision is not immutable merely because res judicata does not strictly apply.

Ratio Decidendi: In income-tax proceedings, each assessment year is self-contained, and a prior finding may be departed from only if the earlier decision was reached without consideration of material facts or was otherwise arbitrary or perverse; otherwise, consistency and finality should ordinarily be preserved.

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