26 May 2014
144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee.
I have quoted as to what the section says. my doubt is whether the term "variation of income" can be interpreted as change in the head of income also ? for example; the assessee charges income under the head capital gains and the assessing officer is of the view that the same has to be come under business income. will this amount to variation and income ?? Can the AO directly pass the final assessment order without passing the draft assessment order on the basis that change in head of income without changes being made in the value as such does not result in variation of income. please help . thank you
"Variation in income" connotes change in value/amount and not change in heads of income under which it is being taxed. Hence in the present case change in head of income does not amount "variation in income", therefore AO has right to pass the funal order without opting for draft order
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