TMI Blog2006 (6) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... irety, is the statement of partner recorded during the course of search. As per the decision in the case of Paul Mathews Sons v. CIT [ 2003 (2) TMI 25 - 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 u/s 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 u/s 44AD of the Act. Thus, it is held that no addition could be made to the income of assessee and, therefore, addition made is deleted - In the result, appeal filed by the assessee is allowed. - P.K. BANSAL AND I.P. BANSAL, JJ. Rajesh Kumar for the Respondent. ORDER I.P. Bansal, Judicial Member. - This is an appeal filed by the assessee and it is directed against the order of CIT(A) dated 10th November, 2000, for assessment year 1997-98. 2. Ground of appeal reads as under : "1. Addition of Rs. 6,07,830 for on money . The proceedings und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89,080. 7. The Assessing Officer issued show-cause notice to the assessee as to why the said sum of Rs. 6,07,830 should not be added separately being disclosed income. The Assessing Officer vide letter dated 15th February, 2000 asked assessee to submit explanation as to why its income should not be computed at Rs. 5,94,547 as per computation below : 1. Sales receipts Rs. 28,30,800 Rs. 2,26,464 8% Less: (A)Interest to partners Rs. 92,860 (B) Salary to partners Rs. 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its and gains of business or profession : Provided that nothing contained in this sub-section shall apply in case the aforesaid gross receipts paid or payable exceed an amount of forty lakh rupees. (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed : [ Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause ( b ) of section 40. ] (3) The written down value of any asset used for the purpose of the business referred to in sub-section (1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. (4) The provisions of sections 44AA and 44AB shall not apply insofar as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute regarding the applicability of section 44AD of the Act on the facts of the case of assessee. 11. Now the only question which survives for our consideration is that whether only on the basis of statement made by the partner during the course of survey such addition could be sustained? As per well-settled law there is a basic difference between the statement recorded under section 133A of the Act as compared to statement recorded under section 132(4) of the Act. Such difference has been brought out by Hon. Kerala High Court in the case of Paul Mathews Sons v. CIT [2003] 263 ITR 101. It will be relevant to reproduce the following observations of their Lordships from the said decision : "Section 133A(3)( iii ) enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding under the Act. Section 133A, however, enables the income-tax authority only to record any statement of any person which may be useful, but does not authorize taking any sworn statement. On the other hand, we find that such a power to examine a person on oath is specifically conferred on the authorised officer only under section 132(4) of the Income-tax Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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