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2014 (12) TMI 470 - AT - Income TaxRejection of books of account and estimation of profit Held that:- FAA rightly held that the assessee, under the provisions of Income Tax Law, can maintain its books of accounts either on Cash Basis or Mercantile basis - the AO has not properly analyzed the veracity of books of account nor has he properly appreciated various facts - the various other reasons given by the AO in support of his decision to reject the books of account are trivial in nature, which does not warrant such a decision - CIT(A) has come to the conclusion that the rejection of books of account of the assessee and consequently estimation of net profit is not justified - CIT(A) has properly analyzed the facts prevailing in the instance case and has taken conscious decision on this matter - AO has not found any defect in the books of account revenue could not file any material to controvert the findings of the CIT(A) the order of the CIT(A) is upheld Decided against revenue. Assessment of security deposit Held that:- CIT(A) was rightly of the view that the assessee has received the security deposit from the prospective patients under the promotional scheme floated by the assessee - the assessee has given copies of all deposits, details of patients, amount received, copies of dental record to the AO - the AO has proceeded to assess the amount under the impression that the assessee is not liable to repay the security deposit received by it - assessee has refunded the security deposit to the patients - CIT(A) was justified in holding that there is no cessation of liability in respect of the security deposits - Since the assessee is liable to repay the security deposit, the question of assessing the same u/s 28(iv) also does not arise the order of the CIT(A) is upheld Decided against revenue. Unexplained investment u/s 69 Held that:- CIT(A) rightly held that the assessee has accounted for the deposit of ₹ 3.70 crores paid to M/s Royal Dental Clinic Pvt. Ltd. in its books of account but the same was netted of against the security deposit while preparing the balance sheet - CIT(A) has given clear finding that the assessee has accounted for the investment made in M/s Royal Dental clinic Pvt Ltd in books of account, and since the assessee has followed a particular method for grouping the accounts and presented only the net balance in the balance sheet, it cannot be held that the assessee has not accounted for the investment of ₹ 3.70 crores made with M/s Royal Dental Clinic Pvt. Ltd. the order of the CIT(A) is upheld Decided against revenue. Unexplained credits u/s 68 Held that:- Dr. Arun Chamaria is also assessed by the same officer and upon examination of his assessment record only, the AO has come to know of the fact that the assessee has received the share application money ₹ 20 lakhs from Dr.Arun Chamaria - The reasons for not disclosing the same in the balance sheet has been duly explained by the assessee before CIT(A) and the same has been found to be correct by the FAA also thus, the genuineness of receipt of ₹ 20 lakhs cannot be suspected Decided against revenue.
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