Proper assessment year for taxing undisclosed receipts remained a referable question of law despite supporting factual findings.

A genuine question of law arose on the proper assessment year for taxing an undisclosed receipt, even though the Tribunal had factual material supporting the finding that the sum came from an undisclosed source. The existence of that factual finding did not remove the separate legal issue whether the amount was assessable in the accounting year or the financial year. The Tribunal was therefore bound to state a case and refer the question of law, and its refusal to do so was erroneous. The reference provisions required consideration of the correct year of taxability where that legal issue was distinctly raised.

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Issues: Whether the Tribunal was bound to state a case and refer the question whether the sum of Rs. 2 lakhs, treated as income from an undisclosed source, was assessable in the assessment year 1949-50 on the basis of the assessee's accounting year, or only in the assessment year 1948-49 with reference to the financial year.

Analysis: The controversy raised a question of law arising from the Tribunal's order, because the Tribunal had considered the year in which the disputed receipt was taxable and had proceeded on the basis that the amount represented income of the relevant previous year. The existence of supporting material for the finding that the amount came from an undisclosed source did not eliminate the separate legal issue as to the correct assessment year. On the facts recorded, the broader question whether the sum could be assessed in the year adopted by the department was fit to be referred.

Conclusion: The Tribunal ought to have stated the case on the question of law relating to the assessability of the sum of Rs. 2 lakhs in the relevant assessment year. The refusal to refer that question was erroneous.

Final Conclusion: The appeal was allowed and the Tribunal was directed to refer the specified question to the High Court.

Ratio Decidendi: Where a Tribunal's order raises a genuine question of law as to the proper assessment year for taxing an undisclosed receipt, the existence of factual findings on source does not prevent a reference of that legal question under the reference provisions.

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