1. This is an application under Section 256(2) of the I. T. Act, 1961, hereinafter called ' the Act '.
2. The material facts giving rise to this application briefly areas follows : The applicant-assessee is a firm registered under the Act. For the assessment year 1971 -72, the applicant claimed a deduction of Rs. 15,598 as an expenditure wholly and exclusively incurred for the purposes of earning profits. The contention of the applicant was that the aforesaid amount was paid to Anil Bhasin, son of Madan Mohan, one of the partners of the firm, by way of commission in terms of an agreement of agency entered into between the firm and Anil Bhasin. The claim for deduction made by the assessee was, however, rejected by the ITO, who came to the conclusion that the agreement of agency alleged by the applicant was a sham transaction and that Anil Bhasin, son of one of the partners of the assessee-firm had not rendered any service to the firm in the assessment year in question. The ITO, therefore, held that the payment, alleged to have been made to Anil Bhasin, was bogus and without any consideration, and that the amount was in fact paid to Madan Mohan, one of the partners of the assessee-firm. On appeal, the AAC upheld the findings of the ITO. On further appeal, the Tribunal, after considering the entire material on record, dismissed the appeal and upheld the finding of the ITO that the alleged agreement of agency was a sham transaction. Aggrieved by the order passed by the Tribunal, the assessee submitted an application for making a reference, but that application was rejected. Hence, the assessee has submitted this application.
3. Having heard learned counsel for the parties, we have come to the conclusion that the application deserves to be rejected. Shri Choudhary learned counsel for the applicant, contended that the Tribunal took into consideration facts which were not relevant and that its finding was based on mere suspicion. It was further urged that as regards the finding of the ITO that the payment in question was really made to Madan Mohan,one of the partners of the firm, the Tribunal failed to apply its mind tothat question even though that question was raised before the Tribunal.Learned counsel, therefore, contended that questions of law did arise out of the order of the Tribunal.
4. Now, the finding of the Tribunal that the agency agreement alleged to have been made between Anil Bhasin and the firm was not a genuine transaction and that no payment by way of commission was made to Anil Bhasin was based on the material on record. The Tribunal took into consideration the fact that Anil Bhasin was a young boy, who claimed to be a regular student of the college during the entire period in question. The Tribunal further noted that Anil Bhasin did not have any business experience and that though according to the agency agreement he was required to bring in new customers to the assessee from outside Indore, the assessee had failed to produce any satisfactory evidence to substantiate the claim ofthe assessee that Anil Bhasin had rendered any service to the firm in accordance with the terms of agency agreement. The finding of the Tribunal is thus based on the material on record and, in our opinion, therefore, no question of law arises as urged on behalf of the assessee.
5. As regards the contention that the Tribunal failed to apply its mind to the question as to whether the ITO was justified in holding that the payment, alleged to have been made to Anil Bhasin, was in fact made to Madan Mohan, one of the partners of the firm, the Tribunal, in our opinion, was right in holding that that question could be urged by Madan Mohan in the assessment proceedings taken against him. No question of law, therefore, arises out of the order passed by the Tribunal.
6. For all these reasons, the application fails and is, accordingly, dismissed. In the circumstances of the case, there shall be no order as to costs.