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1,46,887   Rs.

2,39,747             Rs.

() 13,283

2. Disclosed income       Rs.

6,07,830         Total Income Rs.

5,94,547 In response to said letter it was submitted that net profit has been shown by assessee at 9.56% of the total sale consideration i.e., Rs. 34,38,630. It was pleaded that entire "on money" should not be subjected to tax. The only profit rate should be applied. Following calculation was submitted to show that assessable profit of the assessee as per provisions of Section 44AD will be Rs. 35,343 and assessee has submitted return for Rs. 89,081 which is higher than the deemed income assessable under the provisions of Section 44AD. The assessing officer did not accept such submissions and computed the assessable income of assessee at Rs. 5,94,547. Aggrieved assessee filed an appeal before Commissioner (Appeals) who has upheld the assessment. The assessee is aggrieved hence in appeal.

9. On the other hand, learned Departmental Representative relied on the orders of assessing officer and the Commissioner (Appeals).

10. We have carefully considered the rival submissions in the light of material placed before us. Right from the stage 'of assessment the assessee has been relying on Section 44AD of the Act, the contents of which are as under:

44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee engaged in the business of civil construction or supply of labour for civil construction, a sum equal to eight per cent of the gross receipts paid or payable to the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income, shall be deemed to be the profits and gains of such business chargeable to tax under the head 'Profits and gains of business or profession':

(a) the construction or repair of any building, bridge, dam or other structure or of any canal or road;

(b) the execution of any works contract.)" (Emphasis here italicize in print supplied) The receipt of the assessee including that of "on money" does not exceed Rs. 40 lakhs. Thus the assessee is not under a legal obligation to maintain books of account. The books of account, if any maintained, were not produced relying on the provisions of Section 44AD and the net income shown is more than 8% the minimum which can be assessed as deemed income of assessee under Section 44AD of the Act. Under Section 44AD the assessing officer cannot assess income of an assessee more than 8% unless assessee himself show more than 8%. The assessing officer does not have power to assess anything in excess of returned income if the returned income is more than 896 while computing the income of assessee under Section 44AD of the Act. A perusal of assessment order will reveal that addition of Rs.,6,07,830 has been made only on the basis of the fact that partner of assessee firm in the statement recorded at the time of survey had admitted to show the said "on money" as income. learned Commissioner (Appeals) has also upheld the addition on this score only. Otherwise there is no dispute regarding the applicability of Section 44AD of the Act on the facts of the case of assessee.

In the present case the statement has been recorded under Section 133A of the Act. It is not the case of revenue that the total receipts of the assessee exceeded Rs. 40 lakhs so as to say that the income of assessee is not assessable under Section 44AD of the Act. There is no material on record to show that all the expenditure incurred in respect of civil work were duly claimed by the assessee and the receipt of "on money" was the net income of the assessee particularly when assessee has not maintained the books of account, or they have not been produced or relied upon by the assessee. There is no material with the department to arrive at a conclusion that for receiving "on money" assessee did not incur any expenditure. As pointed out earlier, that the only base for the revenue to assess the "on money" in its entirety, is the statement of partner recorded during the course of search. As per aforementioned decision of Kerala High Court no evidentiary value can be attached to such statement unless it is supported by some material. In this view of the situation, it can be held that there is no material with the department to make addition of "on money" in its entirety and what is assessable under Section 44AD is 8% of the gross receipt or more profits shown by assessee in its return of income. In the present case assessee has shown income of more than 8% therefore, no addition can be made by assessing officer while working under Section 44AD of the Act.