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Whether the order of assessment is time-barred? Analysis: The case involved a reference under section 256(1) of the Income-tax Act, 1961, for the assessment year 1975-76, regarding the timeliness of the assessment order. The assessee submitted a return showing an income of Rs. 47,848, including income from house property and a loss under the head "Business or profession." The Income-tax Officer proposed to disallow the business loss claimed by the assessee, treating it as a short-term capital loss under section 144B(1) of the Income-tax Act. The draft assessment order was sent to the assessee on March 18, 1978, close to the limitation date of March 31, 1978. The assessee refrained from objecting under section 144B(2), and the assessment was completed based on the draft order. The main contention was whether the variation made by the Income-tax Officer was prejudicial to the assessee, justifying the application of section 144B(1) and whether the assessment was time-barred. The Commissioner of Income-tax (Appeals) noted that the Income-tax Officer's decision to treat the loss as short-term capital gain instead of a business loss was prejudicial to the assessee's interests. The Commissioner upheld the Income-tax Officer's actions under section 144B, dismissing the objection raised by the assessee. The Tribunal also supported the lower authorities' decision, leading to an appeal before the High Court. The High Court analyzed the provisions of section 144B(1), emphasizing that it applies when there is a variation in the income or loss returned that is prejudicial to the assessee. The distinction between "income" and "total income" was highlighted, indicating that section 144B focuses on variations in income under specific sources, not total income. The High Court concluded that the variation in the loss claimed by the assessee and the Income-tax Officer's decision to disallow part of it constituted a variation in the returned income, justifying the application of section 144B(1). The Court agreed with the Commissioner of Income-tax (Appeals) and the Tribunal that the assessment was not time-barred, as the Income-tax Officer properly exercised jurisdiction under section 144B(1). Therefore, the High Court answered the question in the reference in the negative and in favor of the Revenue. The judgment was a unanimous decision by the judges, with no order as to costs.
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