The department accepted your position for years and has now reversed it. Can it?
Not without a material change. Res judicata does not strictly apply between years, but where a fundamental aspect running through several years has been found as a fact and allowed to stand, it should not be changed in a later year.
Decided by the Supreme Court (Ranganath Misra CJ and Kuldip Singh J) on 1991-11-15, reported as [1992] 193 ITR 321 (SC); [1992] 60 Taxman 248 (SC); [1991] 100 CTR 267 (SC); Civil Appeal Nos. 10574-10583 of 1983. It bears on section 11, section 12, section 256, section 60, section 63 of the Income Tax Act 1961, in Assessment & Scrutiny matters.
This is the rule of consistency, and it is the standard answer where an officer departs from a treatment accepted in earlier years without explaining what changed. Its own caveat is important: the Court said the decision was confined to its facts.
Binding on every court and authority in India.
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The assessee is the Radhasoami Satsang, Agra, a sect founded by Swami Shiv Dayal Singh in 1861 whose tenets accept that God is represented on earth by a Sant Satguru. Funds and properties were built up from offerings to successive Satgurus; in 1902 a Central Council was established and the properties were vested in it, and in 1904 a constitution, bye-laws and a trust deed were drawn up. On the death of the third Satguru in 1907 the creed split into the Soami Bagh and Dayal Bagh sects, and litigation between them ended in the Privy Council decision in Patel Chhotabhai v. Jnan Chandra Basak (in the Court's narrative of the sect's history). Assessment first arose for 1937-38; the Commissioner held in 1945 that the offerings were impressed with a trust character and exempt under s.4(3)(i) of the 1922 Act, and directed their deletion, and for 1939-40 the Appellate Assistant Commissioner upheld exemption in 1947 (in the Court's narrative of the 1937-38 and 1939-40 assessments). Refund applications were thereafter accepted on the footing that the income was exempt. Refunds were first refused for 1964-65 to 1966-67, when the assessee was treated as an association of persons, and assessments for 1966-67 to 1969-70 were then completed denying exemption on the view that the donations were voluntary and limited to religious use but under no obligation. The Tribunal allowed the claim; the Allahabad High Court reversed it, relying on the revocability of the trust and on s.11 being subject to ss.60 to 63 (in the Court's narrative of the assessment years in issue and the High Court's reversal).
The appeals were allowed and the referred question was answered in the affirmative: the Tribunal was justified in holding the income exempt under ss.11 and 12. The Court decided on two grounds. First, on the merits, the properties stood in the name of the Sabha, the Satguru had never claimed title or beneficial interest, and even though the trust was revocable at the Council's discretion the property would not on revocation go back to the Satguru, so the property was subject to the legal liability of being used for the religious or charitable purposes of the Satsang; there had in any event been no Satguru for long before the assessment years in question (in the passage construing clauses 1(b), 9 and 25 of the constitution and bye-laws). Second, on consistency: although res judicata does not strictly apply to income-tax proceedings and each assessment year is a unit, where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challenging the order, it is not at all appropriate to allow the position to be changed in a subsequent year (in the passage beginning "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings"), and in the absence of any material change the question should not have been reopened - the operative answer to the referred question is given at the end of that same passage. The Court accepted the revenue counsel's submission that, the facts being very special, the decision is confined to them and is not an authority for general application (in the penultimate passage, beginning "Counsel for the Revenue had told us that the facts of this case being very special").
On the merits the Court applied to this sect what the Allahabad High Court had found for the Dayal Bagh group in Secretary of State for India in Council v. Radha Swami Sat Sang - that the offerings and the property grown out of them vested in the Sabha for the benefit of the Satsangis, the head of the sect having no beneficial or personal interest - and held that the test applied by the Privy Council in All India Spinners' Association v. CIT applied, with a result in the assessee's favour. It read clause 1(b), clause 9 and clause 25 of the constitution and bye-laws together to hold that even on revocation the property would not revert to the Satguru but would simply be administered by the Central Council, so revocability did not defeat the exemption; the High Court had not had this aspect properly put to it (in the passage construing clauses 1(b), 9 and 25 of the constitution and bye-laws). It also noted that the Privy Council in Patel Chhotabhai had been construing the Charitable and Religious Trusts Act 1920, whose requirements are considerably different from those of s.11 (in the passage distinguishing that decision), and that no formal document is necessary to create a trust (earlier in the judgment). On consistency it drew on the Madras Full Bench in T.M.M. Sankaralinga Nadar & Bros., on Lord Shaw's observations in Hoystead v. Commissioner of Taxation, and on Parashuram Pottery Works for the policy that there must be a point of finality and that stale issues should not be reactivated, observing that assessments are quasi-judicial and those observations apply equally (in the passages leading up to and including the res judicata passage).
We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
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Handle my notice → Ask a CA on WhatsAppNot without a material change. Res judicata does not strictly apply between years, but where a fundamental aspect running through several years has been found as a fact and allowed to stand, it should not be changed in a later year. This was decided by the Supreme Court (Ranganath Misra CJ and Kuldip Singh J) and bears on section 11, section 12, section 256, section 60, section 63 of the Income Tax Act 1961. It is reported as [1992] 193 ITR 321 (SC); [1992] 60 Taxman 248 (SC); [1991] 100 CTR 267 (SC); Civil Appeal Nos. 10574-10583 of 1983. This is the rule of consistency, and it is the standard answer where an officer departs from a treatment accepted in earlier years without explaining what changed. Its own caveat is important: the Court said the decision was confined to its facts. If it applies to you, the first step is this: Document the earlier years: assessment orders, appellate orders, or acceptance in scrutiny on the same facts.
The assessee is the Radhasoami Satsang, Agra, a sect founded by Swami Shiv Dayal Singh in 1861 whose tenets accept that God is represented on earth by a Sant Satguru. Funds and properties were built up from offerings to successive Satgurus; in 1902 a Central Council was established and the properties were vested in it, and in 1904 a constitution, bye-laws and a trust deed were drawn up. On the death of the third Satguru in 1907 the creed split into the Soami Bagh and Dayal Bagh sects, and litigation between them ended in the Privy Council decision in Patel Chhotabhai v. Jnan Chandra Basak (in the Court's narrative of the sect's history). Assessment first arose for 1937-38; the Commissioner held in 1945 that the offerings were impressed with a trust character and exempt under s.4(3)(i) of the 1922 Act, and directed their deletion, and for 1939-40 the Appellate Assistant Commissioner upheld exemption in 1947 (in the Court's narrative of the 1937-38 and 1939-40 assessments). Refund applications were thereafter accepted on the footing that the income was exempt. Refunds were first refused for 1964-65 to 1966-67, when the assessee was treated as an association of persons, and assessments for 1966-67 to 1969-70 were then completed denying exemption on the view that the donations were voluntary and limited to religious use but under no obligation. The Tribunal allowed the claim; the Allahabad High Court reversed it, relying on the revocability of the trust and on s.11 being subject to ss.60 to 63 (in the Court's narrative of the assessment years in issue and the High Court's reversal). The matter was decided on 1991-11-15 by the Supreme Court (Ranganath Misra CJ and Kuldip Singh J). On those facts the Supreme Court held as follows. The appeals were allowed and the referred question was answered in the affirmative: the Tribunal was justified in holding the income exempt under ss.11 and 12. The Court decided on two grounds. First, on the merits, the properties stood in the name of the Sabha, the Satguru had never claimed title or beneficial interest, and even though the trust was revocable at the Council's discretion the property would not on revocation go back to the Satguru, so the property was subject to the legal liability of being used for the religious or charitable purposes of the Satsang; there had in any event been no Satguru for long before the assessment years in question (in the passage construing clauses 1(b), 9 and 25 of the constitution and bye-laws). Second, on consistency: although res judicata does not strictly apply to income-tax proceedings and each assessment year is a unit, where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challenging the order, it is not at all appropriate to allow the position to be changed in a subsequent year (in the passage beginning "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings"), and in the absence of any material change the question should not have been reopened - the operative answer to the referred question is given at the end of that same passage. The Court accepted the revenue counsel's submission that, the facts being very special, the decision is confined to them and is not an authority for general application (in the penultimate passage, beginning "Counsel for the Revenue had told us that the facts of this case being very special").
On the merits the Court applied to this sect what the Allahabad High Court had found for the Dayal Bagh group in Secretary of State for India in Council v. Radha Swami Sat Sang - that the offerings and the property grown out of them vested in the Sabha for the benefit of the Satsangis, the head of the sect having no beneficial or personal interest - and held that the test applied by the Privy Council in All India Spinners' Association v. CIT applied, with a result in the assessee's favour. It read clause 1(b), clause 9 and clause 25 of the constitution and bye-laws together to hold that even on revocation the property would not revert to the Satguru but would simply be administered by the Central Council, so revocability did not defeat the exemption; the High Court had not had this aspect properly put to it (in the passage construing clauses 1(b), 9 and 25 of the constitution and bye-laws). It also noted that the Privy Council in Patel Chhotabhai had been construing the Charitable and Religious Trusts Act 1920, whose requirements are considerably different from those of s.11 (in the passage distinguishing that decision), and that no formal document is necessary to create a trust (earlier in the judgment). On consistency it drew on the Madras Full Bench in T.M.M. Sankaralinga Nadar & Bros., on Lord Shaw's observations in Hoystead v. Commissioner of Taxation, and on Parashuram Pottery Works for the policy that there must be a point of finality and that stale issues should not be reactivated, observing that assessments are quasi-judicial and those observations apply equally (in the passages leading up to and including the res judicata passage). In the words reproduced by the source cited on this page: "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year." The decision followed or applied All India Spinners' Association v. CIT [1944] 12 ITR 482 (PC); Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC).
It was decided by the Supreme Court on 1991-11-15 and is reported as [1992] 193 ITR 321 (SC); [1992] 60 Taxman 248 (SC); [1991] 100 CTR 267 (SC); Civil Appeal Nos. 10574-10583 of 1983. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 11, section 12, section 256, section 60, section 63, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were allowed and the referred question was answered in the affirmative: the Tribunal was justified in holding the income exempt under ss.11 and 12. The Court decided on two grounds. First, on the merits, the properties stood in the name of the Sabha, the Satguru had never claimed title or beneficial interest, and even though the trust was revocable at the Council's discretion the property would not on revocation go back to the Satguru, so the property was subject to the legal liability of being used for the religious or charitable purposes of the Satsang; there had in any event been no Satguru for long before the assessment years in question (in the passage construing clauses 1(b), 9 and 25 of the constitution and bye-laws). Second, on consistency: although res judicata does not strictly apply to income-tax proceedings and each assessment year is a unit, where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challenging the order, it is not at all appropriate to allow the position to be changed in a subsequent year (in the passage beginning "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings"), and in the absence of any material change the question should not have been reopened - the operative answer to the referred question is given at the end of that same passage. The Court accepted the revenue counsel's submission that, the facts being very special, the decision is confined to them and is not an authority for general application (in the penultimate passage, beginning "Counsel for the Revenue had told us that the facts of this case being very special"). It arises in Assessment & Scrutiny matters, on section 11, section 12, section 256, section 60, section 63 of the Income Tax Act 1961, and was decided by Ranganath Misra CJ and Kuldip Singh J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show that nothing material has changed — that is the condition, not merely that the treatment differs. Quote the caveat yourself before the department does; it reads better coming from you.
Still good law. Still followed on consistency — the Supreme Court in Municipal Corporation of City of Thane v Vidyut Metallics (2007) cited it approvingly, and digests link it with Godrej & Boyce (2017) and CIT v Excel Industries (2013). Important caveat: the Court itself noted the decision was confined to the facts, so it should not be taken as a general proposition to be followed in every case. That finding was checked against a published source, which is linked on this page, on 2026-08-25. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Cite this with its own limitation attached. In the penultimate passage of the judgment the Court accepted the revenue counsel's submission that, the facts being very special, nothing should be said that would have general application, and stated in terms that the decision is confined to the facts of the case and may not be treated as an authority on aspects decided for general application. The consistency passage is also narrower than it is usually quoted: it requires a fundamental aspect permeating different years to have been found as a fact, and both parties to have allowed that finding to stand unchallenged. Note too that the decision has a second and independent ground - that on the merits the property was held subject to a legal liability to be used for the Satsang's religious purposes and would not revert to the Satguru on revocation (in the passage construing clauses 1(b), 9 and 25 of the constitution and bye-laws) - so the appeal did not turn on consistency alone. The assessment years in issue were 1966-67 to 1969-70. The judgment as delivered opens "RANGANATH MISRA, CJ." and runs as unnumbered prose, so any paragraph number cited for this case comes from a law report and not from the judgment. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were allowed and the referred question was answered in the affirmative: the Tribunal was justified in holding the income exempt under ss.11 and 12. The Court decided on two grounds. First, on the merits, the properties stood in the name of the Sabha, the Satguru had never claimed title or beneficial interest, and even though the trust was revocable at the Council's discretion the property would not on revocation go back to the Satguru, so the property was subject to the legal liability of being used for the religious or charitable purposes of the Satsang; there had in any event been no Satguru for long before the assessment years in question (in the passage construing clauses 1(b), 9 and 25 of the constitution and bye-laws). Second, on consistency: although res judicata does not strictly apply to income-tax proceedings and each assessment year is a unit, where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challenging the order, it is not at all appropriate to allow the position to be changed in a subsequent year (in the passage beginning "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings"), and in the absence of any material change the question should not have been reopened - the operative answer to the referred question is given at the end of that same passage. The Court accepted the revenue counsel's submission that, the facts being very special, the decision is confined to them and is not an authority for general application (in the penultimate passage, beginning "Counsel for the Revenue had told us that the facts of this case being very special").
TaxSphere, “Radhasoami Satsang v CIT”, https://taxnotice.vittsphere.com/caselaw/case/radhasoami-satsang-v-cit/ (validity last checked 2026-08-25)
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