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Facts
During assessment, the assessee made payments of Rs. 65,85,197/- but failed to provide confirmation or specific work details, and bank statements did not reflect these payments. Consequently, the Assessing Officer (AO) deemed the amount unverified and brought it to tax, which the CIT(A) confirmed. The assessee argued that donations were directly received by the payee who then carried out construction of the monastery building, with these transactions reflected in the assessee's books.
Held
The Tribunal noted that while transactions were in the books and the payee received direct donations for construction, the assessee failed to specify the exact work performed and provide confirmation from the payee. Given the assessee's substantial non-compliance before lower authorities, the Tribunal set aside the CIT(A)'s order. The issue was restored to the file of the AO for fresh consideration, with directions for the assessee to address the identified shortcomings.
Key Issues
Whether payments made for construction work, where donations were received directly by the payee, could be deemed unverified and taxable due to the assessee's failure to provide specific work details and payee confirmation.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018- 19 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 16-05-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 05-03-2021. Having heard rival submissions, the appeal is disposed-off as under.
During assessment proceedings, upon perusal of Form 26AS, it transpired that the assessee made payment of Rs.65,85,197/- to Mr. Nagwang Gelek on various dates. The TDS was deducted by the assessee against these payments. However, the assessee failed to file any confirmation, specific details of work as carried out etc. The perusal of bank statement revealed that no such payment was made by the assessee to the payee. The assessee remained substantially non-compliant and therefore, the amount of Rs.65,85,197/- was held to be unverified and brought to tax by Ld. AO. The Ld. CIT(A) confirmed the assessment for the same very reasons against which the assessee is in further appeal before us.
The Ld. AR stated that the donations were directly received by the payee. The said expenditure was incurred towards construction of building and accordingly, capitalized in the books of accounts. The payee carried out the work of construction of the monastery building using the corpus donations which was received from the donors directly in the bank account of the payee. The entries were duly reflected in the books of the assessee. The Ld. AR also furnished the PAN details of the payee.
It, prima-facie, appear that certain donations have been received directly by the payee and the payee has carried out construction of the building for the assessee. The said transactions are duly reflected in the books of the assessee. However, the only shortcoming is that the assessee has failed to specify the exact work carried out by the contractor and also failed to furnish the confirmation from the payee. To enable the assessee to meet with the same and in view of the fact that the assessee largely remained non-compliant before lower authorities, we set aside the impugned order and restore this issue back to the file of Ld. AO for fresh consideration with a direction to the assessee to meet with these shortcomings. No other ground has been urged in the appeal. The appeal stands allowed for statistical purposes. 5. Order pronounced on 04th February, 2026. - - (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 04-02-2026 आदेश की "ितिलिप अ"ेिषत /Copy of the Order forwarded to : 1. अपीलाथ"/Appellant 2. ""थ"/Respondent 3. आयकरआयु"/CIT 4. िवभागीय"ितिनिध/DR 5. गाड"फाईल/GF