Question of Law: factual inferences from account books are not referable under the income-tax reference procedure, so referral refused.

Whether the Commissioner should state and refer a question turns on law versus fact: the court held that the dispute over a recorded receipt depended on evaluation of account books, the assessee's statements and prior conduct, requiring factual findings and inferences about whether sums were gifts or taxable income. Because resolution relied on evidence-based factual determinations rather than a pure question of law, the Commissioner correctly found no question of law and refused the request to state and refer; the application was dismissed with costs.

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Issues: Whether the Commissioner was correct in declining to state and refer a case under Section 66(3) of the Income-tax Act, 1922 on the ground that no question of law arose.

Analysis: The disputed sum of Rs. 17,051 was recorded in the assessee's books as received from a named person; the assessee claimed it as a gift but offered no documentary proof or evidence of the donor's means. The Income-tax Officer treated the entry as representing profits of past years; the Assistant Commissioner, on examination of earlier accounts, found a pattern of regular receipts from the same source and inferred a secret business generating income. The issue whether the entry represented gift or taxable income turns on evaluation of the account books and the assessee's statements and prior year conduct; these matters involve factual findings and inferences from the evidence rather than a question of law.

Conclusion: The Commissioner'sdecision that no question of law arose is correct; the request to state and refer a case under Section 66(3) is refused. The application is dismissed with costs.

Ratio Decidendi: Where the resolution of a dispute depends on factual findings drawn from account books and the assessee's statements, and the determination involves inference as to whether receipts are gifts or income, the matter is a question of fact and does not constitute a question of law for reference under Section 66(3) of the Income-tax Act, 1922.

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