V.P. Tyagi, C.J.
1. This is an application made by the assessee, M/s. Jainarain Jeevraj, under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), praying for issuing a direction to the Tribunal to refer the questions mentioned in the application to this court for its answer.
2. This matter relates to the assessment year 1964-65. At the time of the assessment of the petitioner-firm, the ITO added Rs. 36,000 as an income from undisclosed sources. Against that assessment order an appeal was preferred before the AAC and there the assessee tried to explain that the entry made on September 14, 1962, depositing Rs. 36,000 in the cash book was a bogus entry, because it was made by a 'munim' without having the knowledge of certain facts. According to the assessee, on September 11, 1962, an amount of Rs. 36.000 was withdrawn from the current account of the bank, but the same amount was deposited in a fixed deposit for one month. This fact was not in the knowledge of his 'munim' and, therefore, a bogus entry was made in the cash book of the firm in the following terms:
'Encashment of fixed deposit of Rs. 36,000 which was obtained on September 11, 1962, from the bank.'
3. The ITO made inquiries whether such an amount was ever received by the assessee from the bank on September 11, 1962, The result of the inquiry was that the ITO found that on September 11, 1962, the assessee never received the said amount. In these circumstances, the ITO added an amount of Rs. 36,000 as an income from undisclosed sources.
4. An appeal before the AAC was preferred by the assessee and there the assessee tried to explain that the amount of Rs. 36,000 was available for making entries in the cash book on September 14, 1962, but when he couldnot ultimately succeed in explaining the presence of the money in the hands of the firm on September 14, 1962, he took a stand that the entry was a bogus entry and in fact it affected the assessee's cash position from September 14, 1962, till the end of the accounting year.
5. After having scrutinised the account books of the assessee-firm the learned AAC accepted the assessee's explanation that the entry made on September 14, 1962, was a bogus one. The department challenged the finding of the AAC before the Income-tax Appellate Tribunal. The Tribunal after hearing both the parties sent for the account books of the assessee-firm to be examined by it. The account books were in the custody of the ITO. Therefore, directions were issued by the Tribunal to the departmental representatives to produce the account books before the Tribunal on August 9, 1973. The account books were produced before the Tribunal on the said day. The Tribunal then got the books examined by the ITO to ascertain whether there was any debit entry in the assessee's cash book to counter-effect the credit entry of Rs. 36,000 made on September 14, 1962, After a critical examination of the account books a certificate was produced by the ITO before the Tribunal that there was no such entry in the account books of the assessee which could counter-effect the credit entry of Rs. 36,000 made in the account books of the petitioner-firm on September 14, 1962. It may be mentioned here that when the process of the examination of the account books was going on before the Tribunal, nobody on behalf of the assessee cared to present himself before the Tribunal. On the contrary the assessee's representative, Shri C. S. Agarwal, who was present at the time when the account books were summoned, conceded before the Tribunal that after the examination of the account books whatever finding of fact be given by the Tribunal, the assessee would be bound by it. The assessee did not take care to assist the Tribunal to examine the account books nor did the assessee try to impress upon the Tribunal, when the account books came before it, to show that the entry which was drawn by the assessee's 'munim' as a bogus one was counter-balanced by certain other entries in the account books to tally the cash balance of the firm. The Tribunal, vide its order dated August 23, 1973, allowed the departmental appeal and came to the conclusion that the entry of Rs. 36,000 made in the account book of the assessee-firm on September 14, 1962, was not a bogus entry.
6. The assessee, however, thereafter made an application under Section 254 of the Act for rectification of the order, but that application was also rejected by the Tribunal. Then an application under Section 256(1) of the Act was made by the assessee to refer the matter to this court, but that too was rejected by the Tribunal. It is in these circumstances that the present application under Section 256(2) of the Act was made before this court.
7. The learned counsel, appearing on behalf of the assessee, urged before us that the Tribunal did not consider the reasons and grounds on the basis of which the AAC has accepted the assessee's appeal and called them as irrelevant which, according to him, as the evidence which was available to the Tribunal was ignored by it, vitiated the decision about the question of fact whether the entry made on September 14, 1962, depositing Rs. 36,000 in the account books of the petitioner was bogus or not. In this way, according to the learned counsel, a question of law has arisen which should be referred to this court.
8. Mr. Lodha, appearing on behalf of the revenue, on the contrary, submits that this question whether the entry was a bogus one or not was a question of fact and, therefore, no reference in these circumstances can be made before this court. According to him no question of law arises, specially, when the question is examined in the context of the conduct of the petitioner-firm, who had tried to explain the genuineness of the entry by showing that the cash was available with the petitioner-firm to make the entry on September 14, 1962, and later on changed its stand that it was a bogus entry.
9. Learned counsel for both the parties in the course of their arguments relied on a Supreme Court case in Bai Velbai v. CIT : 49ITR130(SC) . In that case it has been decided that this question whether the addition of an income from undisclosed sources is a question of fact, has been held to be so by the Supreme Court. But in the present case the contention of the learned counsel for the petitioner is that the Tribunal has not considered all those facts and circumstances, which were examined by the AAC, and on the basis of which an inference was drawn by that authority that the entry was a bogus one. He, therefore, prayed that the non-consideration by the Appellate Tribunal of all the facts, which are very relevant, raises a question of law.
10. We have carefully perused the order passed by the AAC and that of the Tribunal. During the examination of the account books by the ITO a question arose that if the entry of Rs. 36,000 made on September 14, 1962, was bogus, then how could the assessee-firm make payments when it had no adequate cash in hand to pay off its liability. This question was tried to be explained by the assessee by saying that the assessee-firm received a rental income from the building and it was out of that amount that the payment was made. It may be mentioned that that amount was not entered in the account books of the petitioner-firm and, therefore, the ITO did not accept the explanation given by the assessee. Regarding the fact as to how the cash balance could tally, the explanation given by the assessee-firm was that there are two entries in the account books, one made on January 11, 1963, for Rs. 20,000 and another made on July 31, 1963, for Rs. 16,088.77 which counter-balanced the effect of the alleged bogus entry made by the 'munim' on September 14, 1962, but this explanation was also rejected by the ITO. However, both these explanations found favour with the AAC and the appeal of the petitioner-firm was accepted by him. When the account books came for scrutiny by the Income-tax Appellate Tribunal the petitioner-firm did not care to bring this fact to the notice of the Tribunal, because on the day when the account books were examined the representative of the petitioner-firm was absent and, unless properly explained by the assessee, these two entries could not be said to be the entries counterbalancing the alleged bogus entry of Rs. 36,000 made on September 14, 1962. Moreover, there was a consent made by the assessee before the Tribunal that whatever finding of fact would be given by the Tribunal it would be accepted by it and it was perhaps on account of that consent that no care was taken by the assessee to be present before the Tribunal when the account books were examined by it. In these facts and circumstances, it is difficult for us to accept the contention of the assessee that the Tribunal ignored or did not take into consideration the facts which it ought to have considered. On the contrary, it was the duty of the assessee to bring all these facts to the knowledge of the Tribunal so that the Tribunal could enable itself to declare the entry of September 14, 1962, as bogus. But no such care was taken. It may also be mentioned here that, in view of the stand taken in the beginning by the assessee that it tried to prove the entry of September 14, 1962, as genuine before the AAC, the burden lay very heavily on it to prove that it was really a bogus entry. At this stage, it is not open to the assessee-firm to say that the Tribunal did not take into consideration the entries of Rs. 20,000 and of Rs. 16,088.77 as counterbalancing the entry of Rs. 36,000, because it was never explained to the Tribunal by anybody on behalf of the assessee in that manner. In these circumstances, it is not open to the assessee now to assert that all the facts were not carefully taken into consideration by the Tribunal. In these circumstances, we do not feel convinced by the argument advanced by the learned counsel for the assessee that any question of law is involved in this case.
11. The reference application under Section 256(2) of the Act is, therefore, rejected.