Change of previous year can justify one assessment for the extended period when the condition is accepted.

When a taxpayer's request to change the previous year from the Diwali year to the financial year is accepted, the assessing authority may lawfully impose a condition that the income for the entire intervening period up to the end of the new accounting year will be assessed in one assessment year. On that basis, the Income-tax Officer could make a single assessment for a period exceeding twelve months by treating the extended period as the previous year for the relevant assessment year. The assessment for the extended period was therefore treated as valid, and the challenge failed.

---

---

Issues: Whether, on a permitted change of the previous year, the Income-tax Officer could lawfully make a single assessment for a period exceeding twelve months by treating the extended period as the previous year for the relevant assessment year.

Analysis: The assessee's request to change the previous year from the Diwali year to the financial year was allowed on the condition that the income for the extended period would be assessed in the assessment year 1977-78. That condition was accepted by the assessee. The governing principle, as applied, was that when consent to a change of previous year is granted, the assessing authority has power to impose a condition covering the full intervening period up to the end of the new accounting year and to assess that entire period in one assessment for the current assessment year.

Conclusion: The single assessment for the extended period was held to be valid, and the challenge to the assessment failed.

---