Full disclosure as a finding of fact can defeat penalty reference when no independent question of law arises.

Full disclosure of the primary facts in Part III of the return was treated as a pure finding of fact, and on that basis penalty under Section 271(1)(c) was not shown to raise any independent legal issue. Because the proposed questions for reference depended entirely on that factual finding, no referable question of law arose under Section 256(1), and the consequential penalty-related question also did not merit reference. The request to state the case and refer the questions was therefore rightly declined.

---

---

Issues: Whether any referable question of law arose from the Tribunal's finding that the assessee had made full and correct disclosure in Part III of the return, so that penalty under Section 271(1)(c) of the Income-tax Act, 1961 was not attracted.

Analysis: The disclosure made in Part III of the return was examined and treated as a complete disclosure of the relevant primary facts. On that basis, the finding that the amount in question was duly brought to the Department's notice was characterised as a finding of fact. Since the proposed questions depended on that factual finding, no independent question of law was seen to arise for reference under Section 256(1) of the Income-tax Act, 1961. The second proposed question, being consequential to the first, also did not warrant reference.

Conclusion: No referable question of law arose; the request to state the case and refer the questions was rightly declined.

Ratio Decidendi: Where the Tribunal's conclusion that there was full disclosure of primary facts is a pure finding of fact, no question of law arises for reference and a consequential penalty issue also fails to call for reference.

---