Concealment penalty question of law arose from an unsubstantiated deduction claim, requiring reference to the High Court.

Failure to substantiate a deduction claim can raise a question of law on concealment penalty, where the Tribunal's order treats the claim as not bona fide and applies section 271(1)(c). The High Court held that such a legal issue arises from the Tribunal's findings and is fit for reference under section 256(2) of the Income-tax Act, 1961. The application was therefore maintainable, and the Tribunal was required to state the case and refer the question of law to the High Court.

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Issues: Whether, on the facts and in the circumstances of the case, a question of law arose from the Tribunal's order so as to justify a reference under section 256(2) of the Income-tax Act, 1961, on the issue of penalty for concealment under section 271(1)(c).

Analysis: The application under section 256(2) concerned the Tribunal's view that the assessee's claim for deduction was not bona fide and that concealment penalty was attracted. The Court held that the legal question whether failure to substantiate a deduction claim amounted to concealment of particulars of income was a question arising from the Tribunal's order and therefore required reference.

Conclusion: The application was maintainable and the Tribunal was required to state the case and refer the question of law to the High Court.

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