Referable question of law absent where Tribunal's additions were deleted on factual findings and evidence appreciation

The Tribunal's deletion of both additions rested on clear findings of fact: the Revenue failed to link the seized paper with the assessee or the alleged investment, and the assessee's explanation of the investment source, including contribution by his wife, was accepted on evidence. Because the dispute was decided on appreciation of material rather than on interpretation of any statutory provision, no referable question of law arose. A Tribunal finding of fact is not open in reference unless unsupported by material or perverse, and no such defect was shown. The application under section 256(2) was therefore liable to be rejected.

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Issues: Whether, on the facts found by the Income-tax Appellate Tribunal, the assessee's application under section 256(2) of the Income-tax Act, 1961, seeking a direction to refer questions to the High Court, disclosed any referable question of law.

Analysis: The Tribunal had deleted both additions on clear findings of fact. In respect of the first addition, it found that the Revenue had failed to establish any connection between the seized paper and the assessee or the alleged investment. In respect of the second addition, it accepted the assessee's explanation regarding the source of investment and found, as a matter of fact, that part of the amount had been invested by the assessee's wife, who was in a position to do so. The controversy was thus decided on appreciation of evidence and not on the construction of any statutory provision. A finding of fact recorded by the Tribunal is not open to challenge in a reference proceeding unless it is unsupported by material or is perverse or arbitrary, and no such case was made out.

Conclusion: No referable question of law arose. The application under section 256(2) was liable to be rejected.

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