Law: Income Tax Act, 1961

Section: 144,153

Income-tax-----Assessment---Limitation---Draft assessment order---Extended period of limitation where 5.144-B applies ---Assessee filing return showing nil income---Draft assessment order assessing income of more than Rs.2 lakhs--¬Section 144-B applied---Assessment completed within extended period under 5.153---Assessment was not barred by limitation---Indian Income Tax Act, 1961,Ss.144-B & 153. In order to attract section 144-B(1) of the Income Tax Act, 1961, there must be a variation in the income or loss returned which is prejudicial to the assessee and the amount of such variation must exceed the amount fixed by the Board under subsection (6). The variation of income contemplated under this section presupposes the existence of two sets of income, one being the income returned by the assessee and the other being the income proposed by the officer. For the assessment year 1979-80 the assessee-trust filed a return showing the total income of Rs.2,08,400 as the voluntary contribution received and since the amount was claimed towards accumulation the balance taxable income was shown as nil. On the other hand, the Income-tax Officer found that the contribution received from Muthoottu Mini Chitty Fund was Rs.2,08,400 and the said amount was the total income of the assessee. The Income tax Officer as per the draft assessment order, dated February 19, 1982, proposed to assess the income at Rs.2,08,400. The said draft assessment order was forwarded to the Inspecting Assistant Commissioner for approval. Subsequently, the draft proposal was approved by the Inspecting Assistant Commissioner under section 144-B of the Income Tax Act, 1961, on June 22, 1982. After receiving the approval, the Income-tax Officer passed the assessment order on July 1, 1982. The assessee contended that the assessment was barred by limitation. The Commissioner of Income¬tax (Appeals) upheld the assessees contention, but the Tribunal, on appeal by the Revenue, held that clause (iv) of Explanation 1 to section 153 would be applicable and hence, the assessment order was not barred by limitation. On a reference: Held, that this was a case where the assessee had filed a return, showing the…

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