Tribunal quashes Commissioner's revision order under Income Tax Act, emphasizing consistency in decisions

Sir Ratan Tata Trust Versus CIT (Exemptions), Mumbai

Sir Ratan Tata Trust Versus CIT (Exemptions), Mumbai - TMI Issues Involved:
1. Invocation of revisional jurisdiction under section 263 of the Income Tax Act by the Commissioner of Income Tax (Exemptions) [CIT(E)].
2. Alleged failure of the Assessing Officer (AO) to conduct detailed enquiries regarding the nature of investments in shares by the assessee.
3. Consistency in applying past Tribunal decisions to the current assessment year (AY).

Issue-wise Detailed Analysis:

1. Invocation of Revisional Jurisdiction under Section 263:
The CIT(E) invoked revisional jurisdiction under section 263 of the Act, arguing that the AO did not make detailed enquiries regarding the assessee's investments in shares, rendering the assessment order erroneous and prejudicial to the interests of the revenue. The CIT(E) cited similar reasons for invoking revisional powers in the assessee's cases for AYs 2014-15 and 2015-16, which were subsequently quashed by the Tribunal.

2. Alleged Failure of AO to Conduct Detailed Enquiries:
The CIT(E) argued that the AO failed to examine the nature of the investments in shares by the assessee, which led to an erroneous and prejudicial assessment order. The Tribunal had previously addressed this issue in the assessee's cases for AYs 2014-15 and 2015-16, concluding that the AO had indeed conducted extensive examinations regarding compliance with sections 11(5) and 13(1)(d) of the Act. The AO had asked the assessee to clarify whether any investments violated these sections, and the assessee provided detailed responses, confirming that the investments did not contravene the provisions. The Tribunal found that the AO's actions were reasonable and consistent with the requirements of a prudent public servant, and there was no need to re-examine the issue in the current year.

3. Consistency in Applying Past Tribunal Decisions:
Both parties agreed that the reasons for invoking revisional powers in the current AY were identical to those in AYs 2014-15 and 2015-16. The Tribunal had previously quashed the CIT(E)'s revision orders for those years, finding that the AO had adequately examined the investments and that there was no prejudice to the revenue's legitimate interests. The Tribunal emphasized the principle of consistency, citing Supreme Court and High Court rulings that established the importance of maintaining consistent positions across assessment years unless there were significant changes in facts or law.

Conclusion:
The Tribunal concluded that the CIT(E) had erred in exercising revisional jurisdiction under section 263, as the AO had conducted necessary enquiries regarding the nature of the investments. The Tribunal reiterated that the AO's actions were consistent with past assessments, and there was no new evidence or legal development warranting a different conclusion. Consequently, the Tribunal quashed the CIT(E)'s order and allowed the assessee's appeal.

Order:
The order pronounced in the open court on February 16, 2022, quashed the CIT(E)'s revision order and allowed the appeal of the assessee.