Reasoned refusal is required in reference petitions where the court must decide if the tax question arises from the tribunal order.

A High Court rejecting a petition under section 66(2) of the Indian Income-tax Act, 1922 must record reasons, particularly where it must decide whether the proposed reference question on penalty under section 28(1)(c) arises from the Tribunal's order. A bare dismissal does not show that this statutory duty was performed and prevents examination of the basis for refusal. The Supreme Court therefore held that the unreasoned dismissal was not justified, set aside the order, and remanded the matter to the High Court for disposal in accordance with law.

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Issues: Whether the High Court could dismiss a petition under section 66(2) of the Indian Income-tax Act, 1922, without recording reasons when considering whether the proposed reference question on penalty under section 28(1)(c) arose from the Tribunal's order.

Analysis: The petition before the High Court required consideration of whether the proposed question, or a suitably modified question, arose from the Tribunal's order. A dismissal without reasons did not show that this statutory duty was performed. Where the High Court rejects such a petition, some reasons must be stated so that the basis of refusal can be examined.

Conclusion: The dismissal without reasons was not justified. The order was set aside and the matter was remanded to the High Court for disposal in accordance with law, which is in favour of the Revenue.

Ratio Decidendi: A court rejecting a petition for reference under section 66(2) of the Indian Income-tax Act, 1922 must give reasons for its refusal, especially where the question whether the proposed reference arises from the Tribunal's order requires judicial determination.

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