Reference under section 66(3) may be directed even when questions were not precisely formulated, if legal issues arise on the facts.

Under section 66(3), the High Court is not confined to the exact wording of questions first suggested by the assessee. If the assessee has identified the grievance in time, the Commissioner must frame the case and the questions arising from the order. Where the Commissioner wrongly refuses to state a case on the ground that no question of law arises, the High Court may direct a reference if the materials disclose legal questions. Where a factual finding is challenged, the relevant inquiry is whether there was evidence to support that finding. The application succeeded because questions of law were found to arise.

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Issues: Whether, on an application under section 66(3), the High Court can require the Commissioner to state a case even though the precise questions of law were not properly formulated before him, and whether questions of law did arise on the facts stated.

Analysis: The statutory scheme under section 66(2) and section 66(3) does not confine the High Court to the exact wording of questions proposed by the assessee. The assessee must identify the grievance within time, but the Commissioner is the authority to frame the case and the questions arising from the order. If the Commissioner wrongly declines to state a case on the footing that no question of law arises, the High Court may interfere and direct a reference where, on the materials, legal questions do in fact emerge. The Court also indicated that where the factual conclusion is challenged, the relevant legal inquiry is whether there was evidence to justify that finding.

Conclusion: The High Court had power under section 66(3) to direct the Commissioner to state a case, and the application succeeded because questions of law were found to arise.

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