Reference under section 256(2) allowed where questions arising from the Tribunal's order were found fit for High Court consideration.

Non-compliance with section 144B and the Commissioner's revision under section 263 were part of the assessment record, while the Tribunal had treated the assessment as erroneous but not prejudicial to the Revenue. The High Court held that the questions framed arose out of the Tribunal's order and were fit for reference under section 256(2) of the Income-tax Act, 1961. Accordingly, the application was allowed and the Tribunal was directed to state the case and refer the questions to the High Court.

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Issues: Whether the questions of law arising from the Tribunal's order warranted a reference to the High Court under section 256(2) of the Income-tax Act, 1961.

Analysis: The assessment involved non-compliance with section 144B of the Income-tax Act, 1961, and the Commissioner had exercised revisionary jurisdiction under section 263 of the Income-tax Act, 1961. The Tribunal had held that the assessment order, though erroneous, was not prejudicial to the interests of the Revenue. On the facts placed before the Court, the questions framed were found to arise out of the Tribunal's order and were fit for reference.

Conclusion: The application was allowed and the Tribunal was directed to state the case and refer the questions to the High Court.

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