Fact-finding findings based on suspicions and inadmissible material can raise a question of law and be challenged.

A fact-finding conclusion is not immune from judicial scrutiny where it rests on irrelevant material, partly inadmissible evidence, or conjecture and suspicion unsupported by proof. The SC notes that a question of law arises if the fact-finding authority's reasoning may have been affected by such material, because the conclusion cannot then be treated as purely factual. On the stated facts, the Tribunal's view that the assessee was carrying on business in shares was found to rest substantially on assumptions and surmises rather than evidence, and a referable question of law was held to arise.

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Issues: Whether the Tribunal's finding that the assessee was carrying on business in shares was vitiated by reliance on suspicions, surmises, and partly inadmissible material, so as to give rise to a question of law under the reference provision.

Analysis: A finding of fact is ordinarily final, but a legal issue arises where the fact-finding authority bases its conclusion on irrelevant material, partly relevant and partly irrelevant material, or conjectures and suspicions unsupported by evidence. Where such inadmissible or speculative material may have affected the conclusion, the finding cannot be treated as immune from judicial scrutiny. On the facts, the Tribunal's reasoning was found to rest substantially on assumptions and surmises rather than on evidence alone.

Conclusion: The finding of the Tribunal was held to be vitiated, and a referable question of law arose. The assessee succeeded in obtaining a reference on the question whether the finding was based on suspicions, surmises, or partly inadmissible material.

Ratio Decidendi: A fact-finding conclusion is vitiated, and a question of law arises, if it is reached by relying on irrelevant or inadmissible material or on suspicions and surmises not supported by evidence.

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