Reference under income-tax law unavailable where penalty rejection turned on pure findings of fact, not a question of law.

A reference under section 256(2) of the Income-tax Act was held unavailable where the Tribunal's decision to reject penalty under section 271(1)(c) rested on a pure finding of fact. The proposed questions merely challenged the Tribunal's appreciation of the material on record and did not disclose any referable question of law. On that basis, the court treated the application as not maintainable and refused to direct a reference.

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Issues: Whether questions arising from the Tribunal's order rejecting penalty under section 271(1)(c) of the Income-tax Act, 1961, gave rise to referable questions of law so as to warrant a direction under section 256(2) of the Income-tax Act, 1961.

Analysis: The findings recorded by the Tribunal were treated as findings on facts, namely that the imposition of penalty was not justified on the materials on record. Since the proposed questions sought to challenge appreciation of facts and the factual conclusion reached by the Tribunal, no referable question of law was seen to arise.

Conclusion: The application under section 256(2) of the Income-tax Act, 1961, was not maintainable on the facts found, and the request for reference was rejected.

Ratio Decidendi: A reference under section 256(2) of the Income-tax Act, 1961, cannot be directed where the Tribunal's conclusion is a pure finding of fact and the proposed questions do not raise a substantial question of law.

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