Draft statement of case is tentative; Tribunal may modify reference questions in the final statement without reviewing its earlier order.

Under section 256 of the Income-tax Act, 1961, a draft statement of case is only tentative and remains open to alteration before the final statement is settled. The Tribunal may reconsider and modify the questions to be referred to the High Court after hearing the parties, because that step forms part of the reference procedure rather than a review of a concluded order. The final statement of case may therefore lawfully differ from the draft statement, and such modification does not constitute an impermissible review. The High Court upheld the Tribunal's addition of questions in the final statement and rejected the challenge.

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Issues: Whether the Tribunal was competent to alter the draft statement of case and add questions in the final statement of case, and whether such alteration amounted to an impermissible review of its earlier decision.

Analysis: The statutory scheme under section 256 of the Income-tax Act, 1961 contemplates the Tribunal drawing up a statement of case for reference to the High Court. The draft statement prepared at an intermediate stage is only tentative, and notice to the parties for suggestions shows that the process remains open until the final statement is settled. The Tribunal may reconsider the questions to be referred while finalising the statement, and such reconsideration is part of the reference procedure rather than a review of a concluded order. The Court held that the draft statement has no finality and that the final statement may lawfully modify it after hearing the parties.

Conclusion: The addition of questions in the final statement of case was valid, and it did not amount to an impermissible review. The issue was decided against the petitioner.

Ratio Decidendi: In reference proceedings under section 256 of the Income-tax Act, 1961, a draft statement of case is only an intermediate and tentative stage, and the Tribunal may alter the questions to be referred when finalising the statement after hearing the parties, without such alteration constituting review.

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