Factual findings on unexplained loan credits do not raise a question of law unless unsupported by evidence or perverse.

A Tribunal's finding that an assessee's loan credit was unexplained remained a pure finding of fact because it was based on the lender's statement and assessment material, and no relevant material was ignored or shown to be irrelevant. The High Court reiterated that interference is warranted only where a factual finding is unsupported by evidence or is perverse; that threshold was not met. As no question of law arose, a reference under section 256(2) of the Income-tax Act, 1961 was not justified and the reference application failed.

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Issues: Whether the Tribunal's finding on the assessee's unexplained loan credit was perverse or unsupported by evidence so as to give rise to a question of law, and whether a reference under section 256(2) of the Income-tax Act, 1961 was warranted.

Analysis: The material on record, including the statement of the alleged lender and the assessment material, had been considered by the Tribunal. The Tribunal had reached the factual conclusion that the lender was not in a position to accumulate funds sufficient to advance the loan to the assessee. The finding was not shown to be based on irrelevant material, nor was any relevant material ignored. A factual finding becomes open to interference only if there is no evidence to support it or if it is perverse; that standard was not satisfied here.

Conclusion: The finding was one of fact, no question of law arose, and the refusal to make a reference was justified.

Final Conclusion: The application for reference failed and stood dismissed.

Ratio Decidendi: A factual finding by the Tribunal will not give rise to a question of law unless it is unsupported by evidence or is perverse.

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