S. S. MEHRA, J.M. : - (1.) THE appellant-assessee, by the appeal, challenges order dt. 4th Aug., 1989, of the learned CIT(A), for asst. yr. 1988-89, on various grounds mentioned in the memorandum of appeal.
(2.) The assessee in this case, by status, is a private limited company, deriving income from executing contract work of construction of Mansoli Super-passage-cum-VR Bridge at RD 20.100 of SYL Canal Project (Pb.). The method of accounting was mercantile and its accounting period was the year ending 31st March, 1988. Return was filed on 30th Nov., 1988, showing income of Rs. 49,810. Assessment was completed on 31st March, 1989, at total income of Rs. 3,91,340, under S. 143(3). First appeal against the said assessment order was heard and decided by the learned CIT(A) and the present appeal before us is in respect of the first appellate order. To start with, we take up ground No. 2 of the appeal. According to this ground of appeal of the assessee, the learned CIT(A) erred in upholding the rejection of the books of account by taking recourse to provisions of S. 145(2). After examination of purchase vouchers, etc., the learned ITO rejected the assessees books of account and applied proviso to sub-s. (2) of S. 145, with the following observations : "3. Examination of the purchase vouchers in regard to material earth work, steel binding and bending, shuttering and concrete etc. revealed that the payments are on basis of internal pay slips on which signatures of the payees have been obtained on revenue stamps. The addresses of the payees, their bills etc. are not maintained. This was found to be the case in respect of purchases of sand and bajri and other material also. Even the payments of labour for completing the work are on the basis of internal pay slips. In these circumstances, the genuineness of the payees or the job for which the payments were made or the material for the purchase of which the expenses were incurred, are not verifiable.
(3.) IN the trading account, work in progress has been valued at Rs. 84,000. The basis of this amount is only estimated and no check book reg the material lying at the site or used in the work in progress, the wages paid and other expenses in connection with the work in progress, are not ascertainable. As such, the provisions of S. 145(2) are applicable in this case." 4. A ground taken before the learned CIT(A) during hearing of the first appeal that the assessee had maintained regular books of account and that the learned ITO erroneously rejected the book version and took recourse to provisions of S. 145(2). The learned CIT(A) confirmed the application of the proviso by the learned ITO as it was contended before him that the objection about the application of the proviso was withdrawn. Thus, the ground on this aspect before the learned CIT(A) was withdrawn and thereafter the action of the learned ITO on the issue was confirmed by the learned CIT(A). The assessees present ground before us is against that part of the first appellate order.;