Question arising from the decision: a referral cannot be ordered on issues not raised before the deciding body; direction discharged.

The article clarifies that a superior court cannot direct a reference or statement of case on a question that did not arise from the lower adjudicative body's decision; the correct test is whether the question was raised and decided by the deciding body. It further notes that taxation can permissibly proceed both by treating unexplained cash credits as income and by estimating business profits from discarded books, but those are distinct bases and a referral should not be ordered on a point absent from the tribunal's record. The prior direction was discharged and the Revenue's appeal succeeded.

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Issues: Whether the High Court was correct in directing the Tribunal to state a case on the question whether the sum of Rs. 20,000 was income of the assessee from some other source and not income included in the assessed income on rejection of the books of account.

Analysis: The Tribunal's order and the matters argued before it concerned (i) the genuineness of the entry relating to Rs. 20,000 and (ii) the correctness of discarding the books and estimating profits by applying a turnover-based rate. The question framed by the High Court - whether there was material to hold that Rs. 20,000 was income from another source and not part of assessed business income - was not a question that arose out of the Tribunal's order because it was not raised or decided before the Tribunal. The Court observed that while tax may be levied both on unexplained cash credits and on estimated business profits in appropriate cases, the High Court could not direct a statement of case on a question which did not arise from the Tribunal's decision.

Conclusion: The High Court's direction to the Tribunal to state a case on that question was discharged; the appeal by the Commissioner is allowed in favour of the Revenue.

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