Question of law not made out where rejection of affidavit and inference on undisclosed income turned on appreciation of facts.

The Tribunal's rejection of an affidavit and its treatment of unexplained as income from undisclosed sources was held to be a matter of appreciation of evidence and factual inference. The High Court found that the affidavit had been rejected for valid reasons by the authorities below, and that no question of law arose merely because the conclusion was drawn from proved facts. The assessee's argument that the correctness of that inference itself raised a question of law was not accepted, and the reference under section 256(1) of the Income-tax Act, 1961 was declined.

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Issues: Whether the Tribunal's rejection of the affidavit and consequent treatment of Rs. 5,000 as income from undisclosed sources gave rise to any question of law warranting a reference under section 256(1) of the Income-tax Act, 1961.

Analysis: The Tribunal's acceptance or rejection of evidence fell within appreciation of facts. The Court held that the affidavit had been rejected for valid reasons by the authorities below, and that no question of law arose merely because an inference was drawn on proved facts. The contention that the correctness of such an inference itself constituted a question of law was not accepted.

Conclusion: The issue was answered against the assessee. The reference was declined because the matter did not disclose any question of law.

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