Scope of reference limits new tax contentions: a section 34 notice service issue could not be expanded on reference.

In a reference under section 66(1), the court's jurisdiction is confined to questions arising out of the Tribunal's order, so a contention not raised before or decided by the Tribunal cannot be introduced for the first time in reference. The dispute concerned service of a section 34 notice within the prescribed period, including the validity of substituted service by affixture. A new plea that delayed service was saved by section 4 of the Indian Income-tax (Amendment) Act, 1959, was excluded because it had not been raised before the Tribunal. The referred question was answered against the Revenue.

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Issues: Whether the notice under section 34 was properly served within the prescribed period, and whether a new contention not raised before the Tribunal could be urged for the first time in reference.

Analysis: The question referred to the Court was confined to the validity of service of the section 34 notice within time. The assessee had challenged only the mode of substituted service by affixture. The new argument that service beyond eight years was not fatal in view of section 4 of the Indian Income-tax (Amendment) Act, 1959, had neither been raised before the Tribunal nor considered by it. In a reference under section 66(1), the Court can answer only questions that arise out of the Tribunal's order, and a question not raised before or decided by the Tribunal does not qualify merely because it may arise on the facts found. Accordingly, the Court could not permit the Revenue to raise the new contention at that stage.

Conclusion: The referred question was answered in the negative. The Revenue's new plea was not entertainable in reference, and the assessee succeeded on the reference question.

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