Perverse Tribunal findings on secret commission deduction can raise a referable question of law under tax reference procedure.

Where the Tribunal's findings on the genuineness and quantum of a secret commission deduction were challenged as perverse and based on irrelevant considerations, an arguable question of law was held to arise under section 256(2) of the Income-tax Act, 1961. The Revenue had pointed to defects, irregularities and lacunae in the vouchers and supporting material, and the Court found that these contentions made the issue debatable on the evidence. A referable question of law was therefore identified, and the reference application was allowed with the question recast for opinion.

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Issues: Whether an arguable question of law arose from the Tribunal's findings on the genuineness and quantum of deduction claimed as secret commission, so as to warrant a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The Revenue contended that the Tribunal had allowed the deduction despite defects, irregularities, and lacunae in the vouchers and supporting material, and that the findings rested on general considerations rather than the evidence on record. On the material placed before the Court, the findings raised a debatable question whether they were perverse and based on irrelevant considerations.

Conclusion: A referable question of law was found to arise, and the reference was directed.

Final Conclusion: The application seeking reference was allowed, and the question recast by the Court was directed to be referred for opinion.

Ratio Decidendi: Where the Tribunal's findings on deduction are alleged to be perverse and founded on irrelevant considerations, an arguable question of law arises for reference under section 256(2) of the Income-tax Act, 1961.

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