JUDGMENT
B.N. Kirpal, J.
1. In respect of the assessment year 1980-81, the Income-tax Officer passed an order under section 104 of the Income-tax Act, 1961, holding that additional tax under section 104 should be lived because the petitioner-company had not distributed the requisite dividend. The Income-tax Officer did not accept the contention of the assessed that the dividend was not distributed with a view to build up sufficient reserve for further development. It was noted by the Income-tax Officer that there was no evidence in this regard. An appeal to the Commissioner of Income-tax (Appeals) was dismissed. Before him, the assessed sought to place reliance upon the minutes book of the board of directors where, with regard to item No. 5 concerning the declaration of dividend, it had been written that the dividend was not being declared because money was required for future expansion. The Commissioner of Income-tax (Appeals) noted that there were interpolations in the said minutes book and he did not place any reliance upon this, He further observed that the paid-up capital was only Rs. 3,000 and that non-declaration of dividend was with a view to avoid liability to tax in the hands of the shareholders. Second appeal to the Tribunal also met with no success. An application under section 256(1) was filed seeking reference of the following questions to this court :
“1. Whether, on the facts and circumstances of the case and on a true and correct interpretation of section 104 of the Income-tax Act, 1961, the Tribunal was right in law in upholding the levy of tax on undistributed dividend of Rs. 59,008 ?
2. Whether, on the facts and circumstances of the case, the Tribunal had any material before it to conclude that declaration of dividend was called for despite finding that the petitioner had plans to expand substantially and that, in the ensuing year, the same had actually been done ?”
2. The Tribunal dismissed the said application holding that its findings were based on the material placed on record and that no question of law arose.
3. It is contended in the present application under section 256(2) that, whether section 104 is applicable or not, is a question of law. In the present case, it is not disputed that the company is, what is known as, a section 104 company. It is also not disputed that the provisions of section 104 are attracted to the present case because the requisite dividend was not distributed. The only contention raised was that because of business exigencies, namely, future expansion of the business, the board of directors considers considered that it should not distribute dividend and that is a good ground for not passing an order under section 104. There can be no dispute with the legal propositions but a question arises whether, in the instant case, there was any expansion programme of the assessed-company. The Tribunal has arrived at a finding of fact that there was no expansion programme envisaged at that point of time. The only piece of evidence which was placed before the Tribunal in order to show the expansion programme was the minutes book of the board of directors. It has been found as a fact that the minutes book was interpolated. Of course, reference was made before the Tribunal to fact that, in the following two years, there has been a large scale expansion. This may be so but the question still remains whether, in the year in question and specially when the annual general meeting is held and the directors are deciding whether to distribute the dividend or not, there was any material at that point of time which would show that expansion of the business was envisaged. As the Tribunal has noted, the Commissioner of Income-tax took into consideration the fact that the capital of the petitioner was only Rs. 3,000 and, apart from the interpolated minutes book, there was no other document on the record at that point of time which would indicate that expansion was envisaged. The conclusion of the tax authorities is based on appreciation of evidence and, in our opinion, no question of law arises.
4. Dismissed.