Section 256 of ITA, 1961 : Section 256: Statement Of Case To The High Court

Explanation using Example

Imagine a situation where Mr. Sharma, a business owner, receives an order from the Income Tax Appellate Tribunal (ITAT) on September 15, 1998, which contains a decision on his income tax appeal. Mr. Sharma believes that the ITAT's decision involves a significant question of law that needs to be reviewed by a higher court.

Under Section 256(1) of the Income-tax Act, 1961, Mr. Sharma files an application to the ITAT within the prescribed 60-day period, along with the required fee of two hundred rupees, requesting that the question of law be referred to the High Court for consideration.

However, the ITAT declines to refer the question to the High Court, stating that they do not believe a significant question of law arises from their order. Mr. Sharma, not satisfied with this decision, invokes Section 256(2) and applies to the High Court within six months of receiving notice of the ITAT's refusal, asking the High Court to direct the ITAT to refer the matter.

The High Court agrees with Mr. Sharma that a question of law is indeed present and orders the ITAT to state the case and refer it to the High Court. If Mr. Sharma had missed the six-month deadline, he could potentially rely on Section 256(2A) and request the High Court to accept his application, provided he could demonstrate sufficient cause for the delay.

In a different scenario, if Mr. Sharma had decided to not pursue the matter further after the ITAT's refusal, he could have withdrawn his application within 30 days as per Section 256(3) and would be entitled to a refund of his two hundred rupee fee.