2025 (8) TMI 1746 - AT - Income Tax

Corpus donations not taxable when section 143(1) intimation lacks mandatory prior reasons, entire adjustment quashed

The ITAT Kolkata allowed the assessee's appeal, holding that the intimation issued under section 143(1) treating corpus donations as taxable income was ... Intimation u/s. 143(1) - addition towards corpus donation - HELD THAT:- A perusal of the facts of the present case clearly shows that the intimation u/s. 143(1) of the Act has been issued without issuing the intimation as required under the first proviso to Section 143(1) of the Act. The reasons for the treatment of donation received by the assessee towards the corpus as income of the assessee, has not been intimated by the ld. CPC. This being so, intimation suffers from infirmity which is incurable. Consequently, the intimation issued u/s. 143(1) of the Act is unsustainable and the same stands quashed. Appeal of the assessee is allowed The assessee appealed against the order of the Addl/JCIT(A) dismissing its appeal as time-barred by 85 days in relation to an intimation under section 143(1) treating Rs. 44 lakhs of corpus donation as income. The Tribunal proceeded ex parte qua the assessee due to non-appearance. On examining the statement of facts filed before the first appellate authority, the Tribunal held that the reasons furnished for the 85-day delay were 'plausible.' It emphasized that non-condonation would prejudice the assessee, while condonation would not cause loss to the Revenue. The delay before the Addl/JCIT(A) was therefore condoned. On merits, the Tribunal found that the intimation under section 143(1) had been issued without prior intimation as mandated by the first proviso to section 143(1), and that the reasons for treating the corpus donation as income had not been communicated by CPC. It held that the intimation 'suffers from infirmity which is incurable' and declared the intimation under section 143(1) unsustainable and quashed it, allowing the appeal.