Prior assessment findings do not bind later years when fresh evidence supports a different view of partnership genuineness.

In income-tax proceedings, a finding recorded for one assessment year does not operate as res judicata or estoppel for a later year. A Tribunal may depart from an earlier view on the genuineness of a partnership if fresh material or additional evidence emerges, including subsequent conduct relevant to the reality of the firm. The Tribunal here relied on new documentary evidence and later withdrawals by the partners to conclude that they had acted as genuine partners. That conclusion was treated as a factual finding based on relevant material and was not found perverse or otherwise vitiated.

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Issues: Whether the Tribunal was justified in law in departing from its earlier finding on the genuineness of the firm and in treating the partnership as genuine for the subsequent assessment years on the basis of additional evidence.

Analysis: In income-tax proceedings, findings for one assessment year do not operate as res judicata or estoppel for another year. A prior finding may be departed from when fresh material or additional evidence is produced, and subsequent circumstances may legitimately be used to test the reality of the partnership. Here, the Tribunal did not rest its conclusion merely on the earlier record, but considered new documentary evidence and later conduct, including the partners' withdrawals, and found that the partners had in fact acted as partners in the firm. The resulting conclusion was a finding of fact based on relevant material and was neither perverse nor vitiated.

Conclusion: The Tribunal was justified in law in reaching a different conclusion on the genuineness of the firm on the basis of fresh material, and the answer to the referred question was in the affirmative, in favour of the assessee.

Final Conclusion: The earlier adverse finding did not bind the later assessment years, and the Tribunal's factual finding on genuineness, supported by additional evidence, was upheld.

Ratio Decidendi: In income-tax assessment proceedings, a prior finding for an earlier year is not binding for a subsequent year where fresh material or additional evidence justifies a different finding of fact.

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