Unsupported factual findings can raise a question of law, and incomplete references require a supplementary statement before deciding assessment validity.

A finding of fact may raise a question of law in reference proceedings where the complaint is that there was no material to support it; the legality of treating credited capital as undisclosed income therefore had to be referred. The assessment of a Hindu undivided family could not be properly examined because the Tribunal had not found whether the joint family had in fact been disrupted or had ceased to exist. In the absence of that basic factual conclusion, the legal issue could not be answered and a supplementary statement was required. The High Court's judgment was set aside and the matter remitted for further reference proceedings.

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Issues: (i) Whether a question challenging the existence of material for a factual conclusion in the assessment record gave rise to a question of law requiring a reference to the High Court; (ii) whether the assessment was validly made in the status of a Hindu undivided family where disruption or partition was alleged and no conclusion had been recorded on that material issue.

Issue (i): Whether a question challenging the existence of material for a factual conclusion in the assessment record gave rise to a question of law requiring a reference to the High Court.

Analysis: A conclusion on facts is open to examination in reference proceedings where the complaint is that there was no material to support it. The refusal to call for a statement on that question was erroneous, because whether a finding is supported by any material is itself a question of law arising from the order of the Tribunal.

Conclusion: The question whether there was material to support the finding that part of the credited capital represented undisclosed income did arise as a question of law and should have been referred.

Issue (ii): Whether the assessment was validly made in the status of a Hindu undivided family where disruption or partition was alleged and no conclusion had been recorded on that material issue.

Analysis: The Tribunal did not record a finding on the basic factual question whether the joint family had in fact been disrupted and had ceased to exist. Without such a finding, the legal question could not be properly answered. The earlier decision relied upon did not govern the present situation, because it did not decide whether a family not previously assessed could be assessed after partition in the absence of an order under section 25A(1).

Conclusion: The reference was incomplete and had to be reheard after a supplementary statement on the missing factual issue.

Final Conclusion: The High Court's judgment was set aside and the matter was sent back for further reference proceedings so that the unanswered factual and legal questions could be properly determined.

Ratio Decidendi: Where a finding of fact is attacked on the ground that it is unsupported by material, the issue gives rise to a question of law; and where a reference is based on an incomplete statement that omits a material factual conclusion, the High Court must obtain a supplementary statement before deciding the legality of the assessment.

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