Reference under section 256(2) requires a question arising from the Tribunal's order and supported by correct facts.

A question cannot be referred under section 256(2) of the Income-tax Act, 1961 unless it arises from the Tribunal's order and is framed on the correct factual basis. A proposed question based on the mistaken premise that the Tribunal had rejected a section 146 application merely because the return was not filed before hearing was not maintainable, since the Tribunal actually relied on the absence of a satisfactory explanation for filing the return only after assessment. A second proposed question also failed because it did not arise from the Tribunal's order and section 139(4) was inapplicable where the return had been filed only after assessment was completed.

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Issues: Whether the assessee was entitled to have questions referred under section 256(2) of the Income-tax Act, 1961, when the proposed questions either rested on a mistaken factual premise or did not arise from the Tribunal's order.

Analysis: The application sought reference of three questions, but only two were pressed. The first proposed question proceeded on an incorrect assumption that the Tribunal had upheld rejection of the section 146 application merely because the return was not filed before the hearing; in fact, the Tribunal had held that no satisfactory explanation was given for not filing the return before assessment was made. The second proposed question was held not to arise from the Tribunal's order and, in any event, section 139(4) had no application because the return was filed only after the assessment had already been completed.

Conclusion: The questions were not fit to be referred under section 256(2), and the application was rejected.

Ratio Decidendi: A question cannot be directed to be referred under section 256(2) of the Income-tax Act, 1961 unless it arises from the Tribunal's order and is founded on the correct factual premise; a provision inapplicable to the admitted facts cannot sustain a reference.

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