Law:

Section:

Section 256 of the Income-tax Act, 1961 – High Court – Reference to – Assessment year 1964-65 – Whether, if a party does not choose to raise a particular question before Tribunal and before High Court, then even if such a question is referred either by Tribunal suo motu or pursuant to directions of High Court High Court, while disposing of reference is not bound and ought not to answer same – Held, yes FACTS The ITO added back a cash credit as the assessee's income from undisclosed sources. Both the AAC and the Tribunal confirmed the ITO's order. The Tribunal further dismissed the reference application filed by the assessee, holding that the questions suggested did not arise from its order. On a further application under section 256(2) seeking direction to refer the very same questions of law, the High Court directed the Tribunal to draw up a statement of case in respect of the question as to whether the Tribunal's finding that the loan by one ‘G' was not genuine, was perverse. The Tribunal accordingly referred the above question. HELD In the instant case, the questions which were suggested by the assessee in its application under section 256(1) and which were reiterated in its application under section 256(2) did not ex facie raise a controversy as to whether the order of the Tribunal was perverse. Question No. 2 which came nearest to the question referred was that whether the Tribunal was right in holding that the loan by ‘G' who confirmed the loan and explained the source thereof, was not a genuine one. The said question appeared to assume that it had been found or established that the alleged creditor, had confirmed the loan and had explained the source thereof in his hands. If it had been so found, then that question could have only one answer, i.e., an answer in favour of the assessee. The finding of the Tribunal being otherwise, the question had to be answered against the assessee or need not be answered as being academic. But on a question of fact it could not be said that the assessee challenged the conclusion of the Tribunal on admitted or undisputed or settled facts as perverse. When the Court directed the Tribunal to draw up a statement of case and…

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