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2015 (4) TMI 1323 - AT - Income TaxRevision u/s 263 by CIT - CIT directed the AO to withdraw deduction allowed u/s 80IB - CIT held that because of non filing of audit report the assessee was not entitled to claim the deduction,that the AO had not considered the issue of non filing of report - order of the AO was erroneous and prejudicial to revenue - HELD THAT:- As basic issue as to how the order of the AO was erroneous and prejudicial to revenue has not been discussed by the CIT.It is also a fact,as stated earlier,that the issue of 80IB deduction was agitated by the assessee before the FAA.In these circumstances the CIT should not have issued notice 263 - CIT had totally ignored the fact that the AO had in earlier nine years allowed the claim made by the assessee.It is true that the rule of res judicata is not applicable to the income tax proceedings. Rule of consistency demands that without bringing distinguishing fact of the year under appeal with the facts of earlier years an opposite stand to the stand of earlier years should not be taken.The only difference noted is that in the year under appeal the assessee had not filed Audit Report before the A)O.But,the report was made available to the CIT and for disallowing the claim allowed in the earlier years he should have pin pointed the reasons for refusing it as to how same was different from the reports of earlier years. An issue deliberated upon by the FAA,partially or fully,is out of preview of proceedings to be initiated u/s.263 of the Act.In our opinion,the order of the CIT fails on touchstone of the merger doctrine and therefore is not valid.We hold that the assessees are required to file audit reports,but filing it before the CIT would not disentitle it from claiming the deduction.The purpose behind filing the report is that no fictitious claim is made and the activities of the assessees are certified by a professional. Deductions, including 80IB of the Act are considered to be benevolent provisions - Considering the purpose behind the legislation the Hon’ble Courts have held that if the report is submitted at the time of active consideration of the claim it has to be taken as sufficient compliance of the provisions of the Act. - Decided in favour of assessee.
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