Income-tax reference under section 256(2): Tribunal wrongly refused to refer questions, and reference was directed for the Revenue.

The High Court considered whether the Income-tax Appellate Tribunal was justified in refusing to state the case and refer proposed questions under section 256(2) of the Income-tax Act, 1961. The reference request concerned the effect of pending proceedings before the Supreme Court and the correctness of the Tribunal's earlier dismissal of the Department's appeal. On the record before it, the Court found that the Tribunal ought not to have declined to refer the questions. The Tribunal was therefore directed to make the reference as prayed for, in favour of the Revenue.

---

---

Issues: Whether the Income-tax Appellate Tribunal was justified in refusing to refer the questions proposed by the Department to the High Court under section 256(2) of the Income-tax Act, 1961.

Analysis: The application arose from the Tribunal's refusal to make a reference on questions relating to the effect of the pending proceedings before the Supreme Court and the correctness of the Tribunal's earlier dismissal of the Department's appeal. On the record placed before the Court, the Tribunal ought not to have declined to state the case and refer the questions sought by the Department.

Conclusion: The Tribunal was held not right in refusing to refer the questions to the High Court, and it was directed to make the reference as prayed for, in favour of the Revenue.

---