Reference under income-tax law requires a fit question of law, even if the penalty provision amendment was overlooked.

A reference under section 256(2) of the Income-tax Act, 1961 is not warranted unless the case is fit for a question of law to be stated. The discussion notes that the Tribunal had relied on an earlier decision while setting aside a penalty, but the amendment to section 271 by Act 5 of 1964, including the omission of the word "deliberately" and the insertion of an Explanation, should have been considered. Even so, the Court held that this did not justify directing a reference to the High Court, so the refusal to require a reference was sustained.

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Issues: Whether the High Court should direct the Income-tax Appellate Tribunal to state a case and refer a question of law under section 256(2) of the Income-tax Act, 1961, in the light of the amendment made to section 271 of the Act by Act 5 of 1964.

Analysis: The Tribunal had set aside the penalty by relying on an earlier decision, but the amendment to section 271, which omitted the word "deliberately" and introduced an Explanation, ought to have been considered. Even so, the Court found that the matter did not justify directing a reference to the High Court under section 256(2).

Conclusion: The application for reference was rightly refused and the appeal failed.

Final Conclusion: The refusal to require a reference was sustained, and the penalty-related dispute was not reopened in appeal.

Ratio Decidendi: A reference under section 256(2) of the Income-tax Act, 1961 is not warranted unless the case is fit for a question of law to be stated, even where the Tribunal may have overlooked a relevant amendment to the penalty provision.

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