LORD FINCAP LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-13(1), DELHI & ANR.

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W.P.(C)/5782/2025HC DelhiDLHC01026049202502 May 2025Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA3 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court held that the Assessing Officer (AO) had passed the impugned assessment order in disregard of the material particulars furnished by the petitioner. The Court found the AO's assertion that no explanation was provided regarding the source of deposits to be ex facie erroneous, given the petitioner's submission of a detailed tabular statement, receipt vouchers, and loan agreements. Consequently, the Court set aside the impugned assessment order. The matter was remanded to the AO to consider the case afresh after considering all the material on record. The petitioner was granted liberty to furnish further relevant information to the AO within two weeks. The AO was directed to pass a fresh assessment order within four weeks from the date of the order.

What were the facts?

The petitioner, Lord Fincap Limited, an NBFC, filed a writ petition challenging an assessment order dated 24.03.2025 passed by the Deputy Commissioner of Income Tax, Circle-13(1), Delhi. The Assessing Officer (AO) added ₹13,43,45,000/- to the petitioner's income for AY 2019-20. This addition comprised ₹10,00,000/- treated as an accommodation entry and ₹13,33,45,000/- for unexplained cash deposits in the petitioner's bank account. The reassessment proceedings were initiated via notices under Section 148A(b) and Section 148 of the Income Tax Act, 1961. The petitioner contended that the cash deposits represented loan installments from customers for motorcycles and two-wheelers, and it had provided detailed documentation, including a tabular statement, receipt vouchers, and loan agreements with borrower photographs, to the AO.

What were the issues?

1. Whether the Assessing Officer erred in passing the assessment order without considering the material particulars furnished by the petitioner regarding the source of cash deposits, thereby making an addition to the declared income for AY 2019-20? Assessee's Contention: The petitioner argued that it had provided comprehensive documentation to the AO, including a tabular statement detailing loan accounts, customer names, deposit amounts, and nature of receipts, along with receipt vouchers and sample loan agreements with borrower photographs. The petitioner asserted that the AO's finding of no explanation being furnished was ex facie erroneous and that the order was passed in disregard of the provided material. Revenue's Contention: The judgment does not record any specific contentions made by the Revenue in response to the petitioner's arguments regarding the furnished documentation. The AO's position, as reflected in the assessment order, was that no explanation was provided regarding the source of deposits.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 148A(b),Section 148A(d),Section 148

AI-generated summary — verify with the full judgment below

$~46 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 5782/2025 and CM APPLs. 26372-74/2025 LORD FINCAP LIMITED .....Petitioner Through: Mr Amol Sinha with Mr Kshitiz Garg and Mr Ankit Kumar, Advocates. versus DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-13(1), DELHI & ANR. .....Respondents Through: Mr Shlok Chandra, SSC with Ms Naincy Jain and Ms Madhavi Shukla, JSCs. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA O R D E R % 02.05.2025 1. Issue notice. 2. The learned counsel for the Revenue accepts notice. 3. The petitioner has filed the present petition challenging an Assessment Order dated 24.03.2025 [impugned assessment order] passed by the Assessing Officer [AO] under Section 147 of the Income Tax Act, 1961 [Act] read with Section 143(3) of the Act. The AO added an amount of ₹13,43,45,000/- to the petitioner’s declared income for Assessment Year [AY] 2019-20. The said addition included an amount of ₹10,00,000/- which according to the AO was an accommodation entry. The balance amount of ₹13,33,45,000/- was added on account of aggregate cash deposited in the petitioner’s bank account maintained with Jammu & Kashmir Bank which according to the AO, remained unexplained. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 19:11:07

4.

The impugned assessment order was passed pursuant to reassessment proceedings that were initiated by issuance of a notice dated 28.03.2023 under Section 148A(b) of the Act. The said notice culminated in an order dated 12.04.2023 passed under Section 148A(d) of the Act and pursuant to the said order, a notice dated 12.04.2023 was issued under Section 148 of the Act. 5. The petitioner is a Non-Banking Financial Company [NBFC] and is engaged in the business of advancing loans. The petitioner claims that it has a portfolio of loans advanced to customers for purchase of motorcycles and two wheelers. The cash deposited in its bank accounts relates largely to the installments paid by its customers for serving the loans advanced by the petitioner. 6. The petitioner claims that it had furnished a tabular statement setting out the details of the loan accounts; the relevant code assigned to the said loan accounts; the customers names; the amount deposited in the bank account of the petitioner; and, the nature of the receipt. 7. The learned counsel appearing for the petitioner drew the attention of this court to the said tabular statement, a copy of which is annexed to the present petition. The petitioner has also filed receipt vouchers clearly indicating the name of the customers; the amount received as well as the reference to the loan agreement. Additionally, the petitioner has provided a sample copy of the loan agreement which, apart from other details, also bears the photograph of the borrower. The learned counsel for the petitioner has affirmed that all the above-mentioned documents were provided to the Assessing Officer. 8. Notwithstanding the information as provided, the AO has proceeded This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 19:11:07

on the basis that the petitioner had not furnished any explanation regarding the source of the deposits. This is ex facie erroneous. Thus, it is apparent that the impugned order has been passed in disregard of the material particulars furnished by the petitioner. 9. We, accordingly, set aside the impugned assessment order and remand the matter to the AO to consider afresh and pass an assessment order after considering the material on record within a period of four weeks from date. 10. The petitioner is also at liberty to furnish further information as it considers relevant to the AO within a period of two weeks from date. 11. The petition is disposed of in the aforesaid terms. Pending applications are also disposed of. VIBHU BAKHRU, J TEJAS KARIA, J MAY 02, 2025 Tr/gsr Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 19:11:07

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