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2022 (8) TMI 259 - AT - Income TaxRevision u/s 263 - Exemption u/s 11 - as per CIT AO has not applied his. mind and has passed the order routinely in perfunctory manner and that no inquires have been conducted on important issue relating to quantum of exemption allowable u/s 11(1)(a) - HELD THAT:- As firstly vide notice dated 07-09-2017, this query was raised by the AO and again by notice dated 23-11-2017, the AO enquired on this aspect. In response, the assessee had responded by letter dated 21-11-2017 and another letter dated 08-12-2017. The assessee had submitted that in all the previous years the Department has considered such grants received from the State Government as income of the society/trust which has been subject to all relevant provisions of section 11 - Therefore, this was not a case where this issue was not considered by the AO during the course of assessment proceedings. Further, the assessee has been receiving government grants in earlier years as well and the Revenue had accepted the same as income of the assessee eligible for accumulation u/s 11 of the Act. In the case of Dharmendra Kumar Bansal [2014 (2) TMI 1210 - ITAT JAIPUR] it was held that before taking any action Commissioner himself shall apply his mind after examining record of any proceedings and his satisfaction is must. Therefore, where satisfaction was of ITO who proposed action u/s 263 but not of Commissioner, issuance of notice u/s 263 on basis of proposal made by ITO was void ab initio. In view of the well-settled proposition as applied to the instant set of facts, we are of the considered view that in the 263 order the Principal CIT has not applied his mind, by calling for the office records, and independently taking a view that the order passed by the AO in the instant set of facts is erroneous and prejudicial to interest of revenue. Principal CIT has acted only on the proposal sent by AO to initiate 263 proceedings. In our considered view, therefore, the order passed under section 263 of the Act is liable to be set. The assessee has appended copies of the order by Income Tax Appellate Tribunal in his own case for assessment year 2012-13 and also copy of the assessment order under section 143(3) of the Act for assessment year 2013- 14, wherein no addition on the assessee has been made by the Revenue in any of the earlier years. The assessee utilises the above grants for the purpose of carrying out the fencing of the railway line to the forest. Though strictly speaking, principle of res judicata does not apply to income tax proceedings, but it is also well-settled principle of law that if there is no change in the facts of the assessee from the previous years, principle of consistency demands that settled issue should not be re-agitated. The assessee has submitted that the assessee Trust is in receipt of government grant in the earlier years as well. However, it is for the first time that this issue has been raised by the Revenue with no change in facts from the earlier years. In the earlier years, the Revenue had accepted the same as income of the assessee as being eligible for accumulation under section 11. As decided n the case of CIT v. SBJ VON Compounders (P.) Ltd [2012 (9) TMI 1221 - GUJARAT HIGH COURT] has held that claim of assessee in respect of valuation of stock which was accepted in preceding assessment year was to be accepted in current year also following doctrine of consistency. Appeal of assessee allowed.
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