Shree Maheshwari Vidyalaya Vs ITO (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT) Kolkata has deleted a ₹4.20 crore addition made under Section 143(1) of the Income Tax Act, 1961, ruling that the adjustment was invalid due to a procedural lapse. The case involved Shree Maheshwari Vidyalaya vs. ITO, where the assessee, a registered charitable trust, had its claim for exemption under Section 11 disallowed by the Centralized Processing Centre (CPC). The disallowance was made in the intimation issued under Section 143(1) without any prior show cause notice (SCN) being issued to the assessee.
The ITAT found this action to be a violation of mandatory legal procedure. The Tribunal noted that before making any adjustments under Section 143(1)(a), the CPC is required to issue a prior intimation, giving the assessee an opportunity to respond. The failure to issue this notice rendered the intimation unsustainable in the eyes of the law.
The ITAT’s decision was supported by a precedent from a coordinate bench in the case of M/s Radha Krishna Mandir Trust vs. The ITO(Exemption), which similarly held that an addition made in an intimation under Section 143(1)(a) without a prior show cause notice is legally invalid. The Tribunal, therefore, set aside the order of the Commissioner of Income Tax (Appeals) and directed the Assessing Officer to delete the addition.
