“rule of consistency”
The decision most relied on for rule of consistency is M/s Sahara India (Farms) v. CIT & Anr. (300 ITR 403), cited in 268 judgments on BharatTax.
Leading authorities on rule of consistency
Administrative orders must be consistent with the rules of natural justice.
The rule of consistency applies when facts or legal positions remain unchanged in earlier assessment years, preventing the Revenue from adopting a divergent stance in subsequent years without new material. This ensures stability and predictability in tax assessments.
The Supreme Court approves the mixed fund theory, holding that no interest disallowance is warranted under section 36(1)(iii) if investments or advances are made from the assessee's own non-interest bearing funds, even when mixed funds are available. This presumption applies when non-interest bearing funds are sufficient to meet the investments.
A statute must be read as a whole, construing every clause with reference to its context and other provisions, to determine the legislature's real intention and ensure a consistent enactment. This principle, known as "ex visceribus actus," helps avoid inconsistencies within the law.
The Revenue cannot take a conflicting stand from what it had earlier accepted in a previous assessment year without compelling justification. This principle of consistency applies to various issues, including the treatment of customs duty in closing inventory.
The Revenue is bound by the rule of consistency and cannot adopt a divergent position in a subsequent assessment year unless there is a change in facts or law.
The rule of consistency does not override the correct application of law and should not be applied if it leads to an anomalous outcome.
The rule of consistency requires that in the absence of any change in material facts or law, a different view or decision on an issue cannot be adopted for subsequent assessment years, thus ensuring uniformity in tax assessments.
