The background story of this Koan
When Buddha was in Grdhrakuta mountain he turned a flower in his fingers and held it before his listeners. Every one was silent.
Only Maha-Kashyapa smiled at this revelation, although he tried to control the lines of his face.
Buddha said: "I have the eye of the true teaching, the heart of Nirvana, the true aspect of non-form, and the ineffable stride of Dharma.
It is not expressed by words, but especially transmitted beyond teaching. This teaching I have given to Maha-Kashapa."
On first glance it sounds like the Christian sermon on the mountain. But it's a Taoist test: without words, who understands the Buddhas teaching best?
The original Chinese Goang
The World Honored One a long time ago at a convocation on top of Spirit Mountain* picked up a flower and showed it to the multitude.
At that time all the multitude were thus silent. Only Arya Kashyapa gave a broad smile and laughed a little.
The World Honored One said, “I possess the storehouse of the correct Dharma eye, the wonderful heart-mind of Nirvana, the formless true form, the subtle Dharma gate, not established by written words, transmitted separately outside the teaching.
I hand it over and entrust these encouraging words to Kashyapa.”
Traditional Commentaries and .... Poems (Gata)
Golden-faced Gautama thought he could cheat anyone. He made the good listeners as bad, and sold dog meat under the sign of mutton. And he himself thought it was wonderful. What if all the audience had laughed together?
How could he have transmitted the teaching? And again, if Maha-Kashapa had not smiled, how could he have transmitted the teaching?
If he says that realization can be transmitted, he is like the city slicker that cheats the country dub, and if he says it cannot be transmitted, why does he approve of Maha-Kashapa?
Golden-faced Gautama acted audaciously.
He shelved the good to be cheap. He hung a sheep’s head and sold dog meat.
How many are ready to say this is peculiar?
But supposing at that place and time the great multitude had all laughed, how could he have put forth the storehouse of the correct Dharma eye in a living transmission?
If Kashyapa was not caused to laugh, how could he have put forth the storehouse of the correct Dharma eye in a living transmission?
If you say the storehouse of the correct Dharma eye can be imparted, then the golden-faced old mister gives deceiving advise at the village gate. If you say it is not imparted, then verily how can it be that Kashyapa alone was approved?