Reference under section 256(2): section 147(b) issue could not be raised for the first time at the reference stage.

In a reference application under section 256(2) of the Income-tax Act, a question framed on section 147(b) was held not to arise from the Tribunal's order where reassessment had throughout been justified on section 147(a) read with section 148. An alternative basis first raised only at the reference stage, and not forming part of the reassessment foundation or the Tribunal's adjudication, could not be introduced as a question arising from the order. The proposed reference therefore failed the statutory requirement under section 256(2) and was not maintainable.

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Issues: Whether, in an application under section 256(2) of the Income-tax Act, 1961, the question framed on the basis of section 147(b) could be said to arise out of the Tribunal's order, where the Revenue's case before the authorities was founded on section 147(a) read with section 148 and the alternative plea under section 147(b) was raised for the first time at the reference stage.

Analysis: The Revenue had proceeded throughout on the footing that reopening was justified under section 147(a) read with section 148. The proposed question, however, was framed on section 147(b), which was not the basis on which reassessment had been initiated or communicated to the assessee. A contention first advanced at the stage of reference, and not forming part of the foundation of the reassessment proceedings or the Tribunal's adjudication, could not be treated as a question arising from the Tribunal's order. The Tribunal was therefore justified in declining to permit that alternative basis to be raised at that stage, and the proposed question did not satisfy the requirement of section 256(2).

Conclusion: The question based on section 147(b) did not arise out of the Tribunal's order and the application for reference was not maintainable.

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