Legal Correspondent

HYDERABAD: A Division Bench of the A.P. High Court comprising Justice T. Meena Kumari and Justice Ramesh Ranganathan has recorded an undertaking given orally by the counsel of the Income Tax Department that no coercive steps will be taken against Margadarsi Financiers till the next date of hearing before which the department will file a counter affidavit.

The Bench was hearing a writ petition filed by Margadarsi Financiers challenging the notices issued by the IT Department on Thursday.

‘Rule violated’

The IT Department had issued notices to Margadarsi asking them why a penalty of nearly Rs. 1,000 crore not be levied. It claimed that many of the deposits received by the finance company had violated the rule that no deposit more than Rs. 20,000 should be received in cash.

Mr. Ramoji Rao, representing the company, contended that Margadarsi was careful about receiving the deposits in cash, but had assisted the depositors in obtaining demand drafts at the time of deposits. He complained that the department was claiming that such assistance could not be taken into account and deposits were to be treated as cash payments only and penalty imposed.

He further said in his petition that the department had claimed that some deposits were taken in violation of the rule and therefore, it was deemed that many other deposits were also in violation of the rule.

The department was not ready to verify each deposit and hear his version before finalising the penalty.

In its response, the IT Department sought time to file its counter affidavit. The Bench adjourned the matter by a week.