Connected tax findings must be referred together when one determination directly supports the other.

Where the expenditure-tax assessment and the related income-tax addition rested on the same factual foundation, the connected findings could not be treated as severable. The unexplained income finding was derived from the conclusion that the assessee had incurred higher expenditure than disclosed, so the reference question had to be considered in relation to both linked determinations. The Supreme Court held that the High Court was not justified in dismissing the assessee's application under section 25(3) of the Expenditure-tax Act. The dismissal was set aside and the Tribunal was directed to refer the stated questions to the High Court, in favour of the assessee.

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Issues: Whether the High Court was justified in dismissing the assessee's application under section 25(3) of the Expenditure-tax Act when the related income-tax finding had been treated as referable on the footing that both determinations were inseparably connected.

Analysis: The assessment under the Expenditure-tax Act and the addition in the income-tax proceedings rested on the same factual foundation. The conclusion that the assessee had unexplained income was directly derived from the finding that he must have incurred expenditure higher than what he had disclosed in the expenditure-tax return. In that situation, the two Tribunal orders could not be treated as independent or severable, and the reference question could not be confined to only one side of the connected controversy.

Conclusion: The dismissal of the expenditure-tax reference application was unjustified. The order was set aside and the Tribunal was directed to refer the stated questions to the High Court, in favour of the assessee.

Ratio Decidendi: Where findings in connected tax proceedings are mutually dependent and one determination forms the basis of the other, the reference jurisdiction must be exercised consistently so that the linked questions are referred together.

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