Procedural compliance in tax processing controls validity of adjustments and delay may be condoned on a plausible explanation.

An appeal delay may be condoned where the explanation is plausible and no prejudice is caused to the Revenue; on that basis, an 85-day delay was condoned. An intimation under Section 143(1) treating corpus donation as income cannot be sustained where the statutory requirement of communicating the reasons for adjustment under the first proviso is not met; the impugned intimation was therefore quashed. The matter illustrates that procedural compliance in processing adjustments is mandatory, and non-communication of the basis for an adjustment renders the intimation legally infirm.

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Issues: (i) Whether the delay of 85 days in filing the appeal before the first appellate authority was liable to be condoned; (ii) whether the intimation under Section 143(1) of the Income-tax Act, 1961, treating corpus donation of Rs. 44 lakhs as income, was sustainable when the reasons were not intimated under the first proviso to Section 143(1).

Issue (i): Whether the delay of 85 days in filing the appeal before the first appellate authority was liable to be condoned.

Analysis: The reasons furnished for the delay were found to be plausible. Refusal to condone the delay would prejudice the assessee, while condonation would not cause any loss to the Revenue.

Conclusion: The delay of 85 days was condoned.

Issue (ii): Whether the intimation under Section 143(1) of the Income-tax Act, 1961, treating corpus donation of Rs. 44 lakhs as income, was sustainable when the reasons were not intimated under the first proviso to Section 143(1).

Analysis: The intimation was issued without the requisite intimation of reasons under the first proviso to Section 143(1). The basis for treating the corpus donation as income was not communicated, rendering the intimation legally infirm.

Conclusion: The intimation under Section 143(1) was unsustainable and was quashed.

Final Conclusion: The assessee succeeded in the appeal, with condonation of delay granted and the impugned intimation set aside.

Ratio Decidendi: An intimation under Section 143(1) cannot be sustained where the statutory requirement of communicating the reasons for adjustment is not complied with, and delay in filing an appeal may be condoned where the explanation is plausible and no prejudice is caused to the Revenue.

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