1. ' MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---The Income Tax Appellate Tribunal has referred the following question of law for our opinion:--- "Whether under the facts and circumstances of the case the appellant by not filing appeal against the finding of the I.T.O. Recorded, in immediately preceding year has accepted this finding that the plots sold during the relevant assessment year were purchased with intention of making profits?"
2. ' The facts giving rise to the above question as stated by the ITAT are that in the Assessment Year 1987-88 the appellant claimed exemption in respect of sale consideration of three plots on the plea that the income was capital gain. The Assessing Officer did not accept the plea and taxed the income. In first appeal, it was held that the applicant/assessee had no intention of earning profit by selling the plots subsequently and therefore it was held that the income was capital gain on sale of land which was not taxable. The Department preferred second appeal before the Tribunal mainly contending that similar finding of the Assessing Officer in immediately preceding year was not assailed in appeal. The learned Tribunal accepted the plea for the reason that in the immediately preceding year similar finding was not assailed in the appeal with the result that the finding of the fact was accepted. It was contended on behalf of the above assessee that in the immediately preceding year appeal was not preferred because the amount of tax was very meager and it was not advisable to spend more money for saving lesser tax. It was contended that there was no res judicata in Income Tax law. However, the learned Tribunal did not accept the contention that facts for each year are to be examined separately notwithstanding a finding in the earlier order which was not challenged in the appeal. It was observed by the learned Tribunal that there is no reason for arriving at a different conclusion regarding three plots of land which are in dispute particularly because in the earlier year a finding of the Assessing Officer was not challenged in appeal.
3. ' The Applicant still felt dissatisfied and submitted a Reference Application which was allowed and the question of the law, reproduced above, was referred to this Court.
4. ' We have heard Mr. Akbar Ansari, learned counsel for the Applicant, and Mr. Nasrullah Awan, learned counsel for the Respondent.
5. ' Mr. Akbar Ansari has submitted that the issue is covered with the finding of Hon'ble Supreme Court in the case of Commissioner of Income Tax v. Pakistan industrial Engineering Agencies Ltd. PLD 1992 SC 562, wherein the principle of law has been laid down as follow:--- "It is now well-settled that principles of res judicata cannot be applied to the cases on assessments under the Income Tax Act in the same manner as it is applied in civil proceedings. Reference can be made to C.I.T. v. Waheeduzzaman PLD 1965 SC 171, which was followed in a recent judgment namely Commissioner of Income Tax, Central Zone 'B' v. Farrokh Chemical Industries, C.As. Nos.104 to 111-K of 1984. In both the cases the applicability of principles of res judicata was restricted and in the later case following Waheeduzzaman's case it was observed as follows: "It may be reiterated that a previous decision of an Income Tax Authority will not be a bar in the following cases:---
(i) Where the earlier decision is clearly open to some objection;
(ii) if it is decision which is not reached after proper enquiry;
(iii) if it is a decision as could not reasonably have been reached on the material before the Authority;
(iv) it is a decision which suffers from such a defect which falls within the purview of the ground mentioned in section 100, C.P.C. And liable to correct thereunder in second appeal, if it were a decision of a Civil Court; and
(v) if fresh evidence having a material bearing on the point decided in the previous decision is available?"
6. ' We entirely agree with the observations and need not further dilate upon this aspect of the case."
7. ' A perusal of the dictum laid down by the Hon'ble Supreme Court shows that the issue whether the principle of res judicata is applicable to the income proceedings stands decided in negative.
8. ' Mr. Nasarullah Awan, learned counsel for the respondent, is not able to deny the fact that the issue stands settled by the Hon'ble Supreme Court in several judgments starting from C.I.T. v.
9. Waheeduzzaman PLD 1965 SC 171, to the case of Commissioner of Income Tax v. Pakistan Industrial Engineering Agencies Ltd., (supra).
10. Respectfully following the principle laid down by the Hon'ble Supreme Court the question referred to us is answered in negative. The finding of the Tribunal being violative of the law laid down by the Hon'ble Supreme Court is not sustainable in law and the order passed by the C.I.T. Appeals is in consonance with the law laid by the Hon'ble Supreme Court.
11. ' A copy of this judgment shall be sent to the Income Tax Appellate Tribunal under the seal and signature of Registrar of this Court to pass the order in conformity with this judgment. The Reference Application stands disposed of, accordingly.