This appeal under s. 260A of IT Act, is directed against order of Tribunal, Indore, dt. 6th Aug., 2004, in ITA No. 1035/Ind/1998, relating to asst. yr. 1995-96. appeal has been admitted on following substantial questions of law: "1. Whether Tribunal was justified in applying provisions of s. 44AD in facts of case when admittedly gross receipts of assessee for year in question exceeded Rs. 40,00,000 thereby attracting proviso appended to s. 44AD(1)? When admittedly gross receipt of assessee for year in question was determined at Rs. 69,26,049 whether Tribunal was justified in applying 8 per cent GP as provided under s. 44AD thereby ignoring proviso to section?" On going through record and on hearing learned senior counsel, we find that in substance, following question of law arises: "3. Whether, in facts and circumstances of case, Tribunal erred in deciding appeal of Department, after declaration under Kar Vivad Samadhan Scheme was accepted by Revenue?" assessee is engaged in business of securing contracts from Government Departments for tube well boring. For asst. yr. 1995-96, assessee filed return of income indicating total income of Rs. 77,451, out of gross receipts of 6,92,06,049. books of account of assessee were duly audited. AO, however, rejected books of account of assessee and proceeded to determine income under s. 144 of Act. AO, therefore, estimated net profit at rate of ten per cent on gross receipts and determined income at Rs. 69,02,605. Against framing of assessment by AO, assessee preferred appeal to CIT(A), Indore, who partly allowed appeal of assessee and brought down percentage of net profit to 7.75 per cent. He also allowed claim of assessee for reduction of amount of depreciation on plant and machinery. parties, not satisfied with decision of CIT(A), appealed to Tribunal. Learned counsel submits that during pendency of appeal, Kar Vivad Samadhan Scheme (KVSS) was introduced and in order to buy peace, appellant assessee made declaration, which was accepted. contention of learned counsel is that once declaration under said Scheme was accepted, effect was that appeals abated but Tribunal, unmindful of said legal consequence of Scheme, decided appeal of Revenue and increased net profit from 7.75 per cent to 8 per cent. benefit of depreciation was also declined by referring to provisions of s. 44AD. learned counsel has made reference to s. 44AD in which proviso limits applicability of said provision to gross receipts upto Rs. 40 lakhs. Learned counsel, therefore, submits that once effect of acceptance of declaration under Kar Vivad Samadhan Scheme was abatement of appeals, Tribunal should have refrained from deciding appeal of Revenue. Reference has been made to decision of this Court in Nishit Construction Co. (P) Ltd. vs. ITO (2006) 204 CTR (MP) 310. In said decision, it was held that once valid declaration has been made by assessee, Department s appeal cannot survive till declaration continues to be valid. proviso to s. 92 of Finance (No. 2) Act, 1998 was struck down by Delhi High Court and later by Supreme Court in All India Federation of Tax Practitioners vs. Union of India & Ors. (1999) 151 CTR (Del) 1: (1999) 236 ITR 1 (Del), therefore, Department s appeals pending before Tribunal could not survive, once valid declaration had been made. position that emerges from above discussion is clearly that in case of acceptance of declaration under Kar Vivad Samadhan Scheme, appeals, whether by assessee or by Revenue, before Tribunal do not survive till declaration continues to be valid and, therefore, Tribunal had no jurisdiction to proceed with appeal filed by Department and reject appeal of assessee after declaration under Kar Vivad Samadhan Scheme was accepted and same was in force. Thus, question No. 3 is answered in favour of assessee. Coming to question Nos. 1 and 2, it would be useful to reproduce proviso to s. 44AD(1). said proviso reads as follows: (1) Notwithstanding anything to contrary contained in ss. 28 to 43C, in case of assessee engaged in business of civil construction or supply of labour for civil construction, sum equal to eight per cent of gross receipts paid or payable to assessee in previous year on account of such business or, as case may be, sum higher than aforesaid sum as declared by assessee in his return of income, shall be deemed to be profits and gains of such business chargeable to tax under head "Profits and gains of business or profession": Provided that nothing contained in this sub-section shall apply in case aforesaid gross receipts paid or payable exceed amount of forty lakh rupees. From above proviso it is manifest that applicability of s. 44AD is restricted to cases where gross receipts of assessee for year in question are below Rs. 40 lakhs. In present case, since gross receipts were apparently 6,92,06,049, said provision was clearly not applicable. However, since Tribunal had no jurisdiction to proceed with appeal of Revenue after declaration filed under Kar Vivad Samadhan Scheme was accepted, question Nos. 1 and 2 formulated hereinabove, do not require any answer. Consequently, this appeal is allowed and order of Tribunal passed in appeal preferred by Revenue is set aside. There shall be no order as to costs. *** AGRO ENGINEERING (MP) (P) LTD. v. COMMISSIONER OF INCOME TAX