Inadequate notice in penalty proceedings was treated as a factual issue, so no referable question of law arose.

A challenge to penalty proceedings on the ground of inadequate notice or opportunity under the Income-tax Act was treated as turning on the factual and procedural matrix of the case, not on a pure question of law. The Tribunal's view that the assessee had not been effectively informed of the concealment basis for penalty under section 274(1) was therefore not held to justify a reference under section 256(2). No referable question of law arose, and the application for reference was rejected.

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Issues: Whether the Tribunal's finding that the assessee was not given a proper opportunity in penalty proceedings under the Income-tax Act raised a question of law warranting a reference under section 256(2).

Analysis: The penalty was imposed under section 271(1)(c) on the basis of estimated additions and alleged concealment. The orders below proceeded on the footing that the assessee had not been informed of the particular concealment or the basis of the penalty in a manner sufficient to enable an effective defence under section 274(1). The Court treated the Tribunal's conclusion that the penalty proceedings suffered from want of proper notice and opportunity as a conclusion essentially tied to the facts and procedure of the case, and not as a pure question of law. The Court also declined to pronounce on remand, noting that the case turned on the sufficiency of the procedural fairness afforded in the penalty proceedings.

Conclusion: No referable question of law arose; the application for reference was rejected.

Ratio Decidendi: A challenge to penalty proceedings based on inadequate notice or opportunity, where the Tribunal's conclusion rests on the factual and procedural matrix of the case, does not by itself give rise to a question of law under section 256(2).

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