Bona fide belief and factual findings defeat a referable question of law in penalty deletion proceedings.

The Tribunal's finding that the assessee's omission to disclose income was not deliberate and resulted from a bona fide belief was treated as a finding of fact. On that basis, the deletion of penalty under section 271(1)(c) did not give rise to any referable question of law under section 256(2) of the Income-tax Act, 1961. The High Court therefore rejected the reference application, holding that the order under challenge involved no legal issue warranting reference.

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Issues: Whether, in proceedings under section 256(2) of the Income-tax Act, 1961, the Tribunal's finding that the assessee's omission to include the income in question was not deliberate and was based on a bona fide belief gave rise to any referable question of law from the order deleting penalty under section 271(1)(c) of the Income-tax Act, 1961.

Analysis: The Tribunal had recorded that the assessee entertained a bona fide belief that the amount was not required to be disclosed in the return and that the omission was not deliberate. Those conclusions were findings of fact. On that basis, the order setting aside the penalty did not raise any question of law warranting reference.

Conclusion: No referable question of law arose from the Tribunal's order, and the application under section 256(2) was rejected.

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