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

W.P.(C)/5782/2025

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The case involves Lord Fincap Limited, a Non-Banking Financial Company (NBFC), which challenged an assessment order passed by the Deputy Commissioner of Income Tax. The assessment order added a substantial amount to the petitioner's declared income for the Assessment Year 2019-20, citing unexplained cash deposits and accommodation entries. The petitioner argued that the cash deposits were from loan installments paid by customers, supported by detailed records and documents provided to the AO. However, the AO proceeded with the assessment without adequately considering this information, leading to the petitioner's challenge in the High Court.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 746653 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 02-05-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SHLOK CHANDRA; NAINCY JAIN; MADHAVI SHUKLA
• Assessee Lawyers: AMOL SINHA; KSHITIZ GARG; ANKIT KUMAR
• Keywords: Accommodation entry; Assessment Order; Non banking financial company; Reassessment; Unexplained cash deposit
• Section: 147; 148; 143(3); 148A(b); 148A(d)

Judgement Text

"$~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 07/05/2025 at 14:41:24 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 07/05/2025 at 14:41:24 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 07/05/2025 at 14:41:24 "