CIT vs. NUMERO UNO FINANCIAL SERVICES PVT LTD

ITA 857/2011 Page 1

$~10 * IN THE HIGH COURT OF DELHI AT NEW DELHI

ITA 857/2011

CIT

..... Appellant Through Mr. N.P. Sahni, sr. standing counsel for Ms. Rashmi Chopra.

versus

NUMERO UNO FINANCIAL SERVICES PVT LTD ..... Respondent Through Dr. Seema Jain, Mr. Ajay K. Jain and Mr. Dushyant K. Mahant, Advs.

CORAM:

HON'BLE MR. JUSTICE SANJIV KHANNA

HON'BLE MR. JUSTICE R.V.EASWAR

O R D E R %

05.03.2012

Admit. The following substantial question of law is framed:- “Whether the Income Tax Appellate Tribunal was justified and right in allowing the appeal filed by the respondent-assessee and deleting the penalty under Section 271D of the Income Tax Act, 1961?”

ITA 857/2011 Page 2

the respondent-assessee from Pradeep Aggarwal and Kaveri Aggarwal. The Assessing Officer, in this connection, has referred to the assessment order in the quantum proceedings wherein the nature and character of the aforesaid deposit/transaction has been discussed in detail and the terms loan and deposit were examined. The Assessing Officer has recorded that the authorized share capital of the respondent assessee company was Rs.1,00,000/- only. 4. The CIT (Appeals) confirmed the order of penalty under Section 271D. He has also referred to the fact that the authorized share capital of the respondent-assessee was only Rs.1,00,000/-. He has referred to other factual aspects in paragraph 2.5.0. We may record that as per the findings recorded by the CIT (Appeals), the respondent company did not have any intention/desire to issue shares and the amount was received to meet urgent business needs. CIT (Appeals) had observed that the amount received was loan. He further held that the entries in books of account were not determinative of true character of the transaction. 5. The tribunal in the impugned order has not referred to the factual matrix or given any finding either affirming or contrary to the finding recorded by the Assessing Officer/CIT (Appeals). The tribunal referred to the decision of the Jaipur Bench in the case of Jagvijay 2012:DHC:1558-DB

ITA 857/2011 Page 3

Auto Finance Pvt. Ltd. Vs. ACIT, 52 ITD 504 and held as under:-

“4. We have considered the facts of the case and submissions made before us. A coordinate bench of the Tribunal has already taken the decision in the matter that at the time of receipt, there is no liability on the assessee to return the money. Such a liability arises only in case shares are not allotted to the depositor. Thus, it has been held that penalty is not leviable in such circumstances. Relying on this order, the penalty confirmed by the ld. CIT(A) is deleted.”

ITA 857/2011 Page 4

Commissioner of Income Tax Vs. Rugmini Ram Ragav Spinners (P) Ltd. (2008) 304 ITR 417 was also considered and examined. 8. Thus, the first and the foremost aspect, which has to be considered and examined is whether the amount received was loan or deposit. This aspect has not been considered and examined by the tribunal in spite of the specific findings recorded by the Assessing Officer and the CIT (Appeals). In these circumstances, we answer the aforesaid question of law in favour of the appellant and against the respondent-assessee. However, an order of remit is passed to the tribunal to decide the appeal afresh after recording factual findings and thereafter apply the decision of this Court in ITA No.1192/2011. This order will not be construed as an order which decides the factual issue/question whichever arises for consideration on merits. 9. The appeal is accordingly disposed of. No costs.

SANJIV KHANNA, J.

R.V.EASWAR, J. MARCH 05, 2012 NA

2012:DHC:1558-DB