Income Tax Law / Appeals and Revision

Section 256 of the Income Tax Act, 1961: Statement of Case to the High Court

Section 256 established the earlier procedure for referring a question of law from the Income-tax Appellate Tribunal (ITAT) to a High Court. Its application is now historically limited: the provision concerns Tribunal orders made before 1 October 1998.

Important legal distinction: Section 256 is not the ordinary appeal mechanism for recent ITAT orders. Section 260A replaced the reference route for later orders under the 1961 Act. The Income-tax Act, 2025 contains a separate High Court appeal provision in Section 365; applicable commencement and transitional rules must be considered.

What is a statement of case under Section 256?

A statement of case is a formal account of relevant facts and the legal question prepared by the ITAT for consideration by the High Court. A question of law concerns the interpretation or application of law, as distinguished from a mere disagreement about factual findings. Section 256 was a reference procedure, not an unrestricted rehearing of the tax dispute.

Section 254 deals with orders of the Appellate Tribunal. The cutoff in Section 256(1) expressly confines the reference procedure to orders under Section 254 passed before 1 October 1998.

Section 256 explained subsection by subsection

Section 256(1): Application to the Tribunal

The assessee or the Principal Commissioner or Commissioner could request the ITAT to refer a question of law arising from an eligible order to the High Court. The request had to be made in the prescribed form within 60 days after service of notice of the order. An assessee's application carried a statutory fee of Rs. 200.

If sufficient cause prevented timely filing, the Tribunal could allow a further period of no more than 30 days. Subject to the statutory conditions, the Tribunal was required to prepare the statement of case and refer it within 120 days of receiving the application.

Section 256(2): Refusal to refer a question of law

If the ITAT refused the request because it considered that no question of law arose, the assessee or the relevant tax authority could apply to the High Court within six months of receiving notice of refusal. If the High Court disagreed with the Tribunal's conclusion, it could require the Tribunal to state the case and make the reference.

Section 256(2A): High Court's power to condone delay

The High Court may admit an application after the six-month period in subsection (2) if satisfied that sufficient cause existed for the delay. This provision does not automatically extend time; the applicant must establish the required cause.

Section 256(3): Withdrawal and refund of fee

Where the Tribunal refuses to state a case even after being required to do so under subsection (2), the assessee may withdraw the application within 30 days of receiving notice of refusal. On such withdrawal, the fee paid is refundable.

Section 256 time limits at a glance

Procedure	Statutory period	Provision
Request reference from ITAT	60 days after service of relevant order	256(1)
Additional time for sufficient cause	Up to 30 days	Proviso to 256(1)
ITAT prepares and sends reference	120 days after receipt of application	256(1)
Apply to High Court after ITAT refusal	Six months after service of refusal; delay may be condoned	256(2), 256(2A)
Withdrawal for refund of fee in specified circumstances	30 days after notice of refusal	256(3)

These deadlines concern the historical reference mechanism. They should not be used as filing deadlines for a new High Court appeal.

Section 256 compared with Section 260A and the 2025 Act

Section 260A of the Income-tax Act, 1961 provides for an appeal from an ITAT appellate order to the High Court where the case involves a substantial question of law. The appeal is ordinarily filed within 120 days from receipt of the order; Section 260A(2A) permits the High Court to condone delay for sufficient cause. The memorandum of appeal must precisely identify the substantial question of law.

Section 365 of the Income-tax Act, 2025 addresses appeals to the High Court under the newer statutory framework. The correct statute for a particular matter depends on its governing provisions, commencement, savings and transition rules. Do not assume that every dispute after 1 April 2026 follows an identical procedural route.

For an actual filing, verify the applicable statute, the date and nature of the ITAT order, the court's territorial jurisdiction, limitation and relevant High Court rules.

Legislative background and judicial context

The Finance (No. 2) Act, 1998 introduced the cutoff of 1 October 1998, marking the move from the reference procedure toward the statutory appeal mechanism. Section 256 remains relevant to understanding old references, judgments and related proceedings.

The National Tax Tribunal Act, 2005 contemplated omission of certain reference provisions from a date to be notified. The National Tax Tribunal framework was subsequently struck down by the Supreme Court in Madras Bar Association v. Union of India (2014). Accordingly, an uncommenced proposed omission should not be mistaken for an operative removal of Section 256.

Section 257, concerning direct references to the Supreme Court in certain circumstances, is likewise linked to eligible pre-October 1998 orders. Sections 258 to 260 deal with connected features of the older reference framework.

Frequently asked questions

Does Section 256 apply to recent ITAT orders?

No. Section 256 is a legacy reference procedure confined to orders passed under Section 254 before 1 October 1998. The ordinary route for later orders under the 1961 Act is a High Court appeal under Section 260A, subject to its conditions.

What was the time limit for a reference application?

The application to the Tribunal was to be made within 60 days of service of the relevant order, with a possible further period of up to 30 days for sufficient cause.

What happens if the Tribunal refuses to refer a question of law?

Section 256(2) permitted an application to the High Court within six months of service of refusal. Section 256(2A) permits admission after that period where sufficient cause is shown.

What is the modern alternative to Section 256?

For qualifying appeals under the Income-tax Act, 1961, Section 260A provides an appeal to the High Court involving a substantial question of law. For matters governed by the Income-tax Act, 2025, consult Section 365 and applicable transition provisions.

Official statutory references

Last reviewed: 27 October 2026. This article is general legal information, not case-specific professional advice.