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ITA NO. 255/JP/2023 ITO, WARD 6(4) , JAIPUR VS SHRI GOTAM AGARWAL, JAIPUR The details of undisclosed sale are mentioned at pages 9 & 10 of the assessment order.

3.5 On going through the above details of sales made by the assessee (which is not shown in books of accounts), it is noticed that the sale consideration of the all flats/units sold by the assessee is less than the value assessed by the stamp valuation authority. The specifics and details have also been discussed in para 2.1, 2.2, 2.3 and para 5 of show cause notice dated 25-11-2016 (also reproduced at 3.1 of this order). The assessee was specifically asked, (Para 5 of show cause notice dated 25-11-2016) to explain as to why provisions of S. 43CA should not be applied. The assesse has not filed his reply in respect of application of provisions of S. 43CA of the I.T. Act. Therefore, it is assumed that the assessee has nothing to say or explain in this regard. Hence, the provisions of s. 43CA of 1.T. Act are applicable on sale of all the flats/units which have not been disclosed in books of accounts. As mentioned above, the total sale consideration (assessee's share) is Rs. 62,00,500/- and the stamp valuation of the same is Rs. 90,33,401/- . Hence, the sale consideration is less than stamp valuation by Rs. 28,32,901/- and the same is added to the total income of the assessee u/s 43CAof the IT Act 3.6 Now, the profits arising from the sale consideration of Rs. 62,00,500/- which is not shown in books of accounts is to be determined. The assessee has failed to furnish computation of profits from it with documentary evidences. The books of accounts have also been rejected u/s 145(3) of the 1.T. Act as per detailed in discussion in foregoing paras. Therefore, the undersigned have no option but to estimate the profits earned by the assessee from the undisclosed sale made by him. The assessee has also not furnished the itemized details of opening and closing stock with its valuation. Further, it has also been established that the assessee has tried to make the undisclosed sale as disclosed one in books. Considering these facts and circumstances of the case, I am of the opinion that net profit rate of 20% would be appropriate on the sale consideration of Rs. 62,00,500/- received by the assessee. The same comes to Rs. 12,40,100/-. Hence, the total profits/income arising on the sale which has not been disclosed by the assessee is computed as under:

ITA NO. 255/JP/2023 ITO, WARD 6(4) , JAIPUR VS SHRI GOTAM AGARWAL, JAIPUR It is also seen that after applying Net Profit rate of 20% on the actual sale consideration received by the assessee, AO has considered the Circle Rate/DLC of the office rooms sold by the assessee and has, after invoking the provisions of Section 43CA, made addition of Rs. 28, 32,894 to the income of the assessee. The said additions have been made over and above the Net Profit as estimated by the AO and added to the income of the assessee. The net profit percentage should have been applied by the AO on the DLC value/Circle Rate itself. In my view, AO was incorrect in first applying net profit rate of 20% and, thereafter, making separate addition to the income of the assessee by invoking Section 43CA. I am of the view that the Net Profit rate of 10% should be applied on the DLC Value/Circle Rate of all the office rooms sold by the assessee. A net profit of 10% should be applied on Rs. 90 ,33,394, being the DLC Value/Circle Rate of all the office rooms sold by the assessee, during the year under consideration. This would be the fair estimate of the profits earned by the assessee on the entire transaction. If out of the total net profits so calculated, assessee has already offered certain part of the income for tax then the same shall be reduced from the above estimated profit so computed. Separate additions of Rs. 28,32,894, made by the AO, by invoking Section 43CA are hereby deleted.

3.5 We have heard both the parties and perused the materials available on record. As regards the ground of appeals No. 1 & 2 of the Department, it is noted that the AO while making assessment in the case of the assessee noticed that the sale consideration of all flats/ units sold by the assessee is less than the value assessed by the stamp valuation authority. The assessee was specifically asked (para 5 of show cause notice dated 25-11-2016) to explain as to why provisions of Section 43CA should not be applied for which the assessee had not filed his reply as to invocation of Section 43CA of the Act. Thus the AO assumed that the assessee had nothing to say or explain in this regard. Hence according to the AO, the provisions of Section 43CA are applicable on sale of all the units/ flats being not disclosed in the books of accounts. He also noted that the sale consideration i.e. assessee's share is Rs.62,00,500/-and the stamp valuation of the same is Rs.90,33,401/- which according to the AO is less than the stamp valuation by Rs.28,32,901/- and the same had been added to the total income of the assessee u/s ITA NO. 255/JP/2023 ITO, WARD 6(4) , JAIPUR VS SHRI GOTAM AGARWAL, JAIPUR 43CA of the Act. The AO also noticed that profits arisen from the sale consideration of Rs.62,00,500/- which was not shown in the books of accounts was to be determined for which the assessee failed to furnish the computation of profits with documentary evidence and he further rejected the books of account u/s 145(3) of the Act. Thus the AO had no option except to estimate the profits earned by the assessee from the undisclosed sales made by the assessee. The AO also noted that the assessee failed to provide itemized details of opening and closing stock with its valuation. Hence, in these facts and circumstances of the case, AO opined that 20% net profit rate would be appropriate on the sale consideration of Rs.62,00,500/-

received by the assessee which comes to Rs.12,40,100/-.Conclusively, the AO made an addition of Rs.40,73,001/- (Rs.28,32,901 + Rs.12,40,100). In first appeal, the ld. CIT(A) noted from the evidences put forward by the assessee that the assessee has already disclosed sale consideration pertaining to 6 office rooms amounting to Rs. 21,25,000. The balance consideration of Rs. 39,20,000 on account of sale of office rooms, being 10 in number should be considered for the purpose of determining profits earned by the assessee. Though the AO has estimated Net Profit of 20% on the entire sale consideration yet as per the assessee, the rate so applied by the AO is without any basis and AO should have applied the rate of 8% as provided under section 44AD. To this effect, the ld. CIT(A) found no fact in the assessment order which should warrant adoption of rate of 20%. It is ITA NO. 255/JP/2023 ITO, WARD 6(4) , JAIPUR VS SHRI GOTAM AGARWAL, JAIPUR also noted by the ld. CIT(A) that the assessee has not maintained the books of account properly for which the ld. CIT(A) took a balance view and directed the AO that instead of applying 8% rate as provided in Section 44AD, rate of 10% should be applied on the sale consideration. The ld. CIT(A) has also seen that after applying Net Profit rate of 20% on the actual sale consideration received by the assessee, AO has considered the Circle Rate/DLC of the office rooms sold by the assessee and has, after invoking the provisions of Section 43CA, made addition of Rs. 28, 32,894/- to the income of the assessee. The said additions have been made over and above the Net Profit as estimated by the AO and added to the income of the assessee. According to the ld. CIT(A), the net profit percentage should have been applied by the AO on the DLC value/Circle Rate itself. However, in the view of the ld. CIT(A), the AO was incorrect in first applying net profit rate of 20% and, thereafter, making separate addition to the income of the assessee by invoking Section 43CA.Hence, the ld. CIT(A) was of the view that the Net Profit rate of 10% should be applied on the DLC Value/Circle Rate of all the office rooms sold by the assessee. A net profit of 10% should be applied on Rs. 90 ,33,394, being the DLC Value/Circle Rate of all the office rooms sold by the assessee, during the year under consideration and it would be the fair estimate of the profits earned by the assessee on the entire transaction. If out of the total net profits so calculated, assessee has already offered certain part of the income for tax then the same shall ITA NO. 255/JP/2023 ITO, WARD 6(4) , JAIPUR VS SHRI GOTAM AGARWAL, JAIPUR be reduced from the above estimated profit so computed. Thus, the ld. CIT(A) observed that Separate additions of Rs. 28,32,894, made by the AO, by invoking Section 43CA are hereby deleted. The Bench has taken care of all the issues raised by the Department and decision made by the ld. CIT(A), we deeply noted that there is no infirmity in the order of the ld CIT(A) as we have elaborately discussed hereinabove and the ground raised by the Department as Ground No. 1 and 2 are dismissed.