JUDGMENT This is application made under section 256(2) of Income-tax Act, 1961, by assessee consequent upon dismissal of their application made under section 256(1) of Act by Tribunal ( ITAT ) by order dated May 12, 1997, passed in R. A. No. 11/Ind/97 which in turn arises out of appellate order dated December 27, 1996, passed in ITA No. 778/ IND/92. It is case of applicant that Tribunal ought not have dismissed their application made under section 256(1) of Act for making reference to this court on questions proposed but should have allowed same by making reference under section 256(1) ibid. According to applicant, questions proposed are referable questions and being questions of law arising out of aforesaid appellate order, same need to be decided by this court in its reference jurisdiction conferred by section 256(1) of Act. applicant has proposed following three questions of law which according to applicant do arise out of aforementioned order and are thus referable: (i) Whether, on facts and in circumstances of case Tribunal has erred in law in not following decision of Madhya Pradesh High Court in M. C. C. No. 65/93 decided on August 20, 1996, in case of CIT v. Premier Industries P. Ltd. [1997] 227 ITR 282 which was binding on Tribunal? (ii) Whether on facts and in circumstances of case, Tribunal has erred in law in confirming demand for additional tax when proper adjustments could not be made in return because year in question was first year in which amendments became applicable and return was filed by accounts officer of NTC who was ignorant of amendments and was not assisted by qualified tax consultant and when return was for loss and even after adjustments it was still return for loss and no tax was payable? (iii) Whether, on facts and in circumstances of case, Tribunal was right in law in observing that various adjustments as made by Assessing Officer were not objected to by assessee before Commissioner of Income-tax (Appeals) when such ground was specifically raised in grounds of appeal before Commissioner of Income-tax (Appeals)? Notice of this application was served on respondents. They are served and duly represented. Heard Miss Vandana Kasrekar, learned counsel for petitioner and Shri R. L. Jain, learned senior counsel with Miss Veena Mandlik, learned counsel for respondent. Having heard learned counsel for parties and having perused record of case we are inclined to allow application in part and in consequence direct Tribunal to refer questions framed by us as indicated infra. In our considered view question of law does arise out of order of Tribunal and hence, same should have been referred to this court for answer on merits. We need not take note of facts in detail as it is now for Tribunal to draw statement of case with reference to entire facts and findings rendered by taxing authorities including Tribunal. Suffice it to say, question arose before Tribunal in appeal filed by Revenue (Commissioner of Income-tax) as to whether decision rendered by High Court in M. C. C. No. 65/93 (CIT v. Premier Industries P. Ltd. [1997] 227 ITR 282) decided on August 20, 1996, should be followed or not on particular point which was being debated in appeal amongst several other points. Tribunal declined to follow law laid down by this court essentially on ground that it does not lay down correct principles of law because it has not taken into consideration certain amendments brought on statute book which had bearing over controversy involved therein. Having thus observed in para. 6 of appellate order dated December 27, 1996, Tribunal allowed appeal filed by Revenue and decided issue in favour of assessee. It is this question, assessee proposed to Tribunal for being referred to this court to answer which having been declined, same is reiterated in this application. In our considered opinion manner in which Tribunal has dealt with issue so far as precedents of judicial propriety in following decisions of High Court are concerned, same should have been referred to this court for examination. It is, in our humble opinion, issue which High Court alone has to decide and not for Tribunal to decide. We have our own reservations as to whether Tribunal could make comment on decision of High Court and having done so, whether judicial propriety permitted Tribunal to ignore decision and take its own view. All these issues need to be decided by High Court in reference under section 256(1) ibid. In view of aforesaid discussion, application is allowed. Tribunal is directed to make reference to this court under section 256(1) of Act on following questions of law to be answered by this court: (i) Whether, Tribunal was justified or/and had jurisdiction to ignore decision of High Court rendered in M. C. C. No. 65/ 93 decided on August 20, 1996, on ground that it does not lay down correct principles of law on issue involved therein? (ii) Assuming that Tribunal was so right in their observations, even then what was procedure which Tribunal should have followed in such eventuality? (iii) Having held that decision of High Court rendered in M.C.C. No. 65/93 is not correct, whether Tribunal was justified in proceeding to decide issue against assessee in conflict with view taken by High Court? Let statement of case be sent within three months along with all necessary documents/judgments/orders passed by taxing authorities and High Court to enable this court to answer questions on merits. No costs. *** NATIONAL TEXTILE CORPORATION LTD. v. COMMISSIONER OF INCOME TAX