Aditya Singhania, Nischal Agarwal
“Res Judicata pro veritate accipitur” is the full Latin maxim which has, over the years, shrunk to mere “Res Judicata”. The doctrine of Res Judicata operates on three basic principles stated here-in-below for ease of reference:
Res judicata has been defined under Section 11 of The Code of Civil Procedure, 1908, wherein it is stated that no court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court. Let us be clear that the aforesaid Civil Procedure Code is applicable only to the Administrative Law. However, the concept was so augmented that slowly but steadily the other acts and statutes also started to admit the concept of Res Judicata within its ambit.
Before going in much details, I would prefer to place a question before the readers. What would happen if there was no such principle of ‘Res Judicata’?
In the absence of such a principle, great oppression would have resulted under the colour and pretence of law in as much as there would be no end of litigation and the malicious litigant would have succeeded infinitely vexing his opponent by repetitive suits and actions. In fact such a situation would have coerce the weaker side to renounce his right. Accordingly, it can be said that such principle exists just to prevent the mayhem that might have occurred in the absence of the Res Judicata. In fact it is a potent tool in the hands of an assessee who wants to prevent the Assessing Officer from shifting his stand year to year on whimsical grounds.
In order to make it more lucid, I would prefer to put the words of Hon’ble Supreme Court in double quotes “Plea of res judicata is not mere technicality, but a fundamental principle sustaining rule of law, ensuring finality in litigation.” Accordingly, the application of this doctrine should not be hampered by any technical rules of interpretation.
Applicability of Res Judicata on Taxation:
As of now, it may appear to readers that ‘Res Judicata’ would be applicable in dealing with all jurisprudence. But to your surprise, the principle of Res Judicata is NOT applicable to taxation matters. The view taken by the assesse or appellate, revisional authority or even the High Court in respect of any one assessment period will not be final and conclusive for subsequent assessment period. But in this connection, I would like to cautious readers that such earlier decisions should be a cogent factor in the determination of the same point in subsequent assessment period. It is a settled position of law that issues already concluded in earlier proceedings could be reopened in subsequent proceedings for another period of time if emerging fresh materials give a new dimension to the matter.
The aforesaid can be affirmed in the judgement given by the Hon’ble Supreme Court of India in the case of Radhasoami Satsang vs. CIT (1992) 193 ITR 321 wherein it was stated that “so far as the proposition of law is concerned, it is well settled and needs no further discussion. In taxation matters, the strict rule of Res Judicata as envisaged by Section 11 of the Code of Civil Procedure, 1908 has no application. As a general rule, each year’s assessment is final only for that year and does not govern later years, because it determines the tax for a particular period. It is, therefore, open to the Revenue/Taxing Authority to consider the position of the assessee every year for the purpose of determining and computing the liability to pay tax on that basis in subsequent years.”
The non-application of the doctrine of res judicata in tax matters is based on the fact that assessment for each year is distinct and separate since the Finance Act which alone supports the assessment is sanctioned only for a particular year by legislature.
Disclaimer: The views expressed are strictly of the author and the author is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in this article.