Reference confined to referred facts: new factual basis could not sustain reassessment under amended section 34.

Section 34 of the Indian Income-tax Act, 1922, as amended, could not be invoked on a new factual foundation not forming part of the question referred. The dispute turned on the construction of the Raigarh notification on the facts accepted by the Tribunal, including the merger date of Raigarh State in India. The revenue could not enlarge the reference before the High Court or in appeal by relying on an alternate fact pattern that the Tribunal had declined to reopen, and that refusal had become final. The question referred was therefore answered against the revenue.

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Issues: Whether section 34 of the Indian Income-tax Act, 1922, as amended, applied to the reassessment proceedings on the basis of the Raigarh notification and the facts found before the Tribunal.

Analysis: The controversy turned on the construction of the Raigarh notification in the light of the factual basis accepted before the Tribunal, namely, the date on which Raigarh State merged in India. The revenue sought to advance a different factual basis before the High Court and in appeal, but that basis was outside the question referred and rested on a matter of fact which the Tribunal had declined to reopen. A reference to the High Court cannot be enlarged to cover a new factual foundation not forming part of the question actually referred, and the unchallenged refusal of the Tribunal to frame the issue on that alternate basis had become final.

Conclusion: The amended section 34 could not be applied on the new factual basis urged by the revenue, and the question referred had to be answered against the revenue.

Ratio Decidendi: A reference under the income-tax law must be answered on the facts and question actually referred, and a party cannot introduce a new factual foundation outside the reference to sustain a different legal result.

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