Special leave cannot bypass statutory reference procedure; fact-finding income-tax conclusions stand absent natural justice breach or perversity.

Special leave under Article 136 is not ordinarily available to bypass the statutory reference machinery under the Income-tax Act where the legal question can be addressed within that framework; the challenge to maintainability therefore failed. The Court also held that no breach of natural justice arose where the assessee's representative had notice and an opportunity to cross-examine but did not appear, and the Tribunal's rejection of the alleged gifts and treatment of the business arrangement as suspicious was a permissible fact-finding conclusion, not a perversity. The assessment was thus sustained, and the appeals failed on both maintainability and merits.

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Issues: (i) Whether the appellants could invoke Article 136 of the Constitution of India to challenge the Tribunal's order notwithstanding the availability of the statutory reference procedure under the Income-tax Act, 1922. (ii) Whether the exclusion of the alleged gifts and the income of the business carried on in the name of Brijlal Nandkishore from the assessee's assessment was vitiated by breach of natural justice or by a perverse finding of fact.

Issue (i): Whether the appellants could invoke Article 136 of the Constitution of India to challenge the Tribunal's order notwithstanding the availability of the statutory reference procedure under the Income-tax Act, 1922.

Analysis: Special leave jurisdiction was held to be available only in special circumstances of a kind not capable of being corrected through the ordinary reference procedure. Where a question of law could be raised and answered through the statutory machinery, and where the High Court had already dealt with the referred question and had also declined to call for a further statement, the attempt to bypass that procedure was not justified.

Conclusion: The challenge to maintainability failed, and no special circumstances were found to justify direct intervention.

Issue (ii): Whether the exclusion of the alleged gifts and the income of the business carried on in the name of Brijlal Nandkishore from the assessee's assessment was vitiated by breach of natural justice or by a perverse finding of fact.

Analysis: The statement relied upon by the Income-tax Officer was recorded in the presence of the assessee's representative, who had notice and an opportunity to cross-examine but did not appear. On the facts, the Court found no violation of natural justice. The Tribunal, as final fact-finding authority, was entitled to reject the evidence of the alleged gifts and to treat the arrangement as suspicious and colourable, and its conclusion could not be said to be perversely reached.

Conclusion: No breach of natural justice or perversity was established, and the inclusion of the income in the assessee's assessment was upheld.

Final Conclusion: The appeals were incompetent and, in any event, failed on merits; the assessment made by the Tribunal stood undisturbed.

Ratio Decidendi: Direct recourse to special leave is not available to circumvent the statutory reference machinery where the grievance can be addressed within that framework, and a fact-finding conclusion of the income-tax authorities will not be interfered with absent breach of natural justice or perversity.

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