Referability of penalty question under income-tax law upheld where connected issues had no independent existence.

The question whether penalty under section 271(1)(c) of the Income-tax Act was exigible was treated as at least a mixed question of law and fact, and possibly a pure question of law, making it a referable question under section 256(2). The remaining proposed questions were held to be inseparable from that main issue and had no independent existence. The Tribunal was therefore directed to refer the framed question to the High Court together with the statement of the case.

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Issues: Whether the proposed question regarding exigibility of penalty under section 271(1)(c) of the Income-tax Act was a referable question of law under section 256(2), and whether the remaining proposed questions had any independent existence.

Analysis: On the facts found, the issue whether penalty was exigible was at least a mixed question of law and fact, if not a pure question of law. The other proposed questions were inseparable from the main issue and did not have an independent existence of their own.

Outcome: The petition was allowed to the extent that the Tribunal was directed to refer the framed question to the High Court along with the statement of the case.

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