Tax reference jurisdiction cannot reopen factual findings or create new questions of law by reframing a proposed reference.

In a tax reference under section 256, a finding that there was no conscious concealment, fraud or wilful neglect for penalty under section 271(1)(c) was treated as a finding of fact, so no referable question of law arose. The High Court could not disturb that factual conclusion merely by treating it as unsupported by evidence. It also could not reframe the proposed question to introduce a new challenge to findings of fact that had not been specifically raised in the reference application. The ruling confirms that reference jurisdiction is confined to questions arising from the Tribunal's order and properly raised before it.

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Issues: (i) Whether any referable question of law arose from the Tribunal's finding that no concealment, fraud or wilful neglect was proved so as to justify penalty under section 271(1)(c) of the Income-tax Act, 1961. (ii) Whether the High Court could reframe the proposed question under section 256(2) of the Income-tax Act, 1961 so as to enable a challenge to the factual findings recorded by the appellate authorities.

Issue (i): Whether any referable question of law arose from the Tribunal's finding that no concealment, fraud or wilful neglect was proved so as to justify penalty under section 271(1)(c) of the Income-tax Act, 1961.

Analysis: The finding recorded by the appellate authorities was that there was no conscious concealment, fraud or wilful neglect on the part of the assessee. That finding was one of fact. In a reference proceeding under section 256(2), the High Court cannot disturb or go behind a finding of fact merely because it is said to be unsupported by evidence, unless the point was specifically raised in the application under section 256(1). On the facts found, the proposed question did not disclose an independent question of law.

Conclusion: No referable question of law arose on the penalty issue, and the contention was rejected.

Issue (ii): Whether the High Court could reframe the proposed question under section 256(2) of the Income-tax Act, 1961 so as to enable a challenge to the factual findings recorded by the appellate authorities.

Analysis: The power to reframe a question is limited to amplifying or clarifying the question already arising out of the Tribunal's order. It does not extend to introducing a new question that was never raised before the Tribunal in the reference application. Since no specific challenge to the factual findings had been made under section 256(1), the court could not enlarge the reference to include that issue. The advisory jurisdiction under section 256 could not be used to create a fresh controversy outside the proposed question.

Conclusion: The High Court could not reframe the question to cover a new challenge to the findings of fact, and the plea was rejected.

Final Conclusion: The applications failed because no question of law arose from the Tribunal's factual findings and the court's limited reference jurisdiction did not permit introduction of a fresh issue by reframing.

Ratio Decidendi: In a tax reference, the High Court cannot disturb unchallenged findings of fact or reframe the proposed question to raise a new issue not arising from the application before the Tribunal; only questions already arising out of the Tribunal's order and properly raised can be referred.

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