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TMI Blog2014 (7) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... eted the same. 3. Briefly stated, assessee is a partnership firm carrying on business of obtaining deposits and providing loans. It paid interest at 1.75% on deposits obtained by it and collects interest at 4% on the advances made by it. There was survey operation at the premises of the assessee on 05.12.2003 and various books of accounts and documents were impounded. There are certain quantum additions made consequent to the survey where the actual receipt of interest at 4% was brought to tax along with amounts received as deposits as unexplained cash credits in the books of accounts. A.O. also initiated proceedings for levy of penalty under section 271D for violation of provisions of section 269SS in accepting deposits for more than Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and after receiving the report in which A.O. did not controvert the contention of the assessee with evidence that each of the deposit was for a sum of Rs. 10,000/- or less, he deleted the penalty by stating as under : "11. I have carefully considered the submissions made by the learned AR and perused the records in the light of the order passed by the Addl. CIT. I have also considered the appeals filed by the appellant firm against the orders of assessment u/s 143(3) for the assessment years 2000-2001, 2001-2002 and 2002-2003 which were separately considered by my orders in ITA.Nos. 0101/ACIT(OSD),R-11/Hyd/CIT(A)- VI/2005-06, dated 29.12.2005 and ITA No.0102 & 0103 /ACIT(OSD), R-11/ Hyd/CIT(A)-VI/2005- 06,dated:29.12.2005. While consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1- 2004 by the Income Tax Officer Ward-11(2) Secunderabad. The assessee later analysed the circumstances with reference to the entries made in the books of account. The assessee found that the entries were not properly made in the books of account and therefore the assessee submits the following detailed explanations. The assessee is a partnership firm carrying on business in financing. During the course of business activity of the firm it advances amount and accepts deposits from various parties/depositors. It is submitted that : a) The amounts were advance on interest @4% per month. The deposits were accepted and the interest paid on such deposits varied between 1.75% and 2% per month. The deposits were accepted through various agents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alt with the final accounts was also not a qualified Chartered Accountant. By and large the income was tallying with the income derived by the firm and therefore there was no doubt for the partners who signed the accounts without verification. When the partners have analysed and verified the books the above mentioned omissions/commissions were noticed in the books of accounts. The assessee therefore corrected the following mistakes occurred in the books of account. a) The interest received is taken at 4% as against 2.5% thus enhancing the interest received. b) The interest receipt is calculated only in respect of recoverable debts and not against bad debts as per RBI guidelines. c) The difference of interest credited to the Cash Deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e financing with the amounts transferred by the assessee i.e., either by collecting the loans or interest on loans and making payments of the deposits and interest thereon. Virtually the accounts of OSFC were almost carried on behalf of the assessee firm to save itself from the restrictions of the RBI. The assessee was of the view that separate partnership firms would file returns of income based on the entries in the books of OSFC. However, to save litigation, the assessee proposed to incorporate the deposits, loans, payments of interest, receipt of interest and other transactions contained in the books of OSFC in the book of the assessee firm and the final accounts are recast. After making the above adjustments a revised Profit and Loss, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions also cannot be considered as loan or advance and, therefore, the provisions of Sec.269SS are not applicable. In view of the above facts and circumstances of the case, I am of the opinion that it is not a fit case to leavy penalty U/s 271D of the I.T. Act and the penalty levied of Rs. 68,69,300/- for Asst. Year 2002-03 is deleted". 5. After considering the rival contentions, we do not see any reason to interfere with the orders of the Ld. CIT(A) as it is basically on appreciation of facts as available in the books of accounts. Orders in quantum were also heard by us separately and those findings were also confirmed vide our order in ITA.No.783, 369, 370, 371 & 785/Hyd/2006 even dated July, 2014. Consequent to that we do not see ..... X X X X Extracts X X X X X X X X Extracts X X X X
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