Tax reference requires a genuine question of law; factual findings on bad debt, partnership profits, and res judicata controlled the outcome.

A tax reference was held not to arise where the bad debt claim failed on the facts because the assessee did not produce the books or evidence called for, so no denial of opportunity or question of law was shown. The partnership profit share was treated as includible for rate purposes on the admitted facts, which rebutted any Hindu law presumption and showed the capital came from joint family funds. An earlier assessment on the same point did not operate as res judicata in later years; the matter could be reconsidered when fresh facts justified a different view. The petition to require a stated case therefore failed.

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Issues: (i) whether refusal to state a case under Section 66(3) was justified when the assessee claimed a bad debt deduction and alleged lack of opportunity to prove it; (ii) whether the share of profits from a partnership business could be added to the assessee firm's income for rate purposes on the facts found; (iii) whether an earlier assessment order on the same point barred reconsideration in a later assessment year.

Issue (i): whether refusal to state a case under Section 66(3) was justified when the assessee claimed a bad debt deduction and alleged lack of opportunity to prove it.

Analysis: A notice under Section 23(2) had been issued requiring production of evidence in support of the claimed deductions, but the assessee failed to produce the relevant books or materials. On those facts, the plea that no proper opportunity had been given could not be accepted, and no question of law arose from the rejection of the bad debt claim.

Conclusion: The refusal to refer the bad debt issue was justified and the assessee failed on this point.

Issue (ii): whether the share of profits from a partnership business could be added to the assessee firm's income for rate purposes on the facts found.

Analysis: Although a Hindu law presumption may arise in some situations, the admitted facts rebutted any such presumption here. The partner was a minor when the firm began, remained a student, carried on no separate business, owned no independent property, and his capital contribution came from joint family funds. Those facts supported treating the partnership profits as part of the assessee firm's income for rate purposes.

Conclusion: The addition of the partnership share for rate purposes was upheld.

Issue (iii): whether an earlier assessment order on the same point barred reconsideration in a later assessment year.

Analysis: A prior assessment decision does not operate as res judicata in income-tax proceedings. The authorities may reopen the question in a later year, provided the decision is not altered capriciously and fresh facts justify a different conclusion. Here, the earlier order had been brief and made without investigation, while later facts were materially different and supported the re-examination.

Conclusion: The earlier assessment did not bar reconsideration, and the authorities were entitled to decide the matter afresh.

Final Conclusion: The Court held that no referable question of law arose, so the petition for requiring a case to be stated failed and the assessment findings were left undisturbed.

Ratio Decidendi: A tax reference will not lie where, on the facts found, the dispute is one of application of settled law rather than a genuine question of law, and prior assessment findings do not bind the authorities in later years as res judicata.

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