The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the assessment order after finding that the assessee failed to substantiate its explanation for a substantial mismatch between receipts reflected in Form 26AS and income disclosed in its return.

The bench of Vikas Awasthy (Judicial Member) and Krinwant Sahay (Accountant Member) also declined to interfere with the Assessing Officer’s disallowance of ₹5.69 crore towards civil contract and installation charges, after finding that the relevant invoices pertained to periods outside the financial year under consideration. The order was pronounced on August 21, 2026, by a Bench comprising.

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The assessee filed the appeal before the Tribunal on December 29, 2023. It was first listed for hearing on April 8, 2024. According to the Tribunal, the assessee did not appear on that date, following which a fresh notice was issued through email as well as RPAD.

The matter was thereafter listed on 20 occasions. On several dates, the matter was adjourned at the written request of the assessee’s authorised representative, while on other dates nobody appeared on behalf of the assessee. The Tribunal recorded the complete sequence of hearings in its order.
The Tribunal noted that the repeated adjournments were sought on the ground that the assessee was based in the Czech Republic and had only a project office in India. The authorised representative was reportedly in the process of collecting documents from the assessee company.

However, even after 20 adjournments, the necessary documents had not been furnished to the authorised representative for pursuing the appeal. The Bench therefore concluded that the assessee was not keen to defend its appeal and proceeded to adjudicate the matter with the assistance of the Departmental Representative and on the basis of material already available on record.

One of the principal grounds raised by the assessee concerned receipts from Nabinagar Power Generating Company Limited (NPGCL).

The assessee was engaged in the business of construction of cooling towers and had its registered office in the Czech Republic along with a project office in India.

For the relevant assessment year, Form 26AS reflected receipts of ₹24,52,43,968 from NPGCL. However, the assessee had disclosed income of only ₹16,69,30,380, resulting in a substantial difference between the receipts reflected in Form 26AS and the income reported by the assessee.

The Assessing Officer issued a notice dated November 29, 2022, requiring the assessee to explain and reconcile the difference.

In its response dated December 8, 2022, the assessee claimed that the difference represented an advance received from NPGCL, rather than income chargeable for the year.

However, the Tribunal noted that the assessee did not furnish documentary evidence before the Assessing Officer to establish that the disputed amount was actually a loan or advance from NPGCL.

The assessee further contended in its grounds of appeal that it had submitted a confirmation from NPGCL before the Dispute Resolution Panel (DRP) as additional evidence.

The Tribunal, however, found that there was no documentary evidence available before it supporting that assertion. In the absence of material establishing the alleged loan or advance, the Bench found no merit in the assessee’s first ground of appeal and dismissed it.

The ruling therefore underscores the importance of documentary substantiation when an assessee seeks to explain a mismatch between information reported by a payer and income disclosed in its return. A mere explanation that the difference represents an advance was insufficient when supporting evidence was not available on record.

The second issue before the Tribunal concerned the assessee’s claim for deduction of civil contract charges and installation charges.

The Assessing Officer had examined 67 invoices and bills aggregating to ₹23,68,50,550. On examination, the AO found that bills amounting to ₹5,69,14,879 related to periods outside the relevant financial year.

The AO consequently disallowed the amount on the ground that the expenditure related to a prior or subsequent period rather than the assessment year under consideration.

The assessee challenged this finding before the Tribunal, arguing that the deduction had been wrongly denied.

However, the Tribunal found that there was no material before it controverting the Assessing Officer’s findings regarding the period to which the invoices related. The Bench therefore declined to interfere with the disallowance.

After examining both grounds, the Tribunal upheld the assessment order in its entirety.

The Bench concluded that the assessee had failed to establish its explanation regarding the NPGCL receipts and had also failed to produce material capable of displacing the Assessing Officer’s finding that ₹5.69 crore of the claimed expenses related to periods outside the relevant financial year.

Accordingly, the Tribunal held that there was no reason to interfere with the assessment order and dismissed the assessee’s appeal.

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