Section 257 of the Income Tax Act, 1961: Reference to Supreme Court in Certain Cases
Section 257 established a narrow procedure by which the Income-tax Appellate Tribunal (ITAT) could refer a question of law directly to the Supreme Court where conflicting High Court decisions made such a reference expedient. The provision is confined to the old reference regime involving Tribunal orders made before 1 October 1998.
Meaning and scope of Section 257
The expression statement of the case means the Tribunal's formal account of the relevant facts and legal question referred for a court's opinion. A question of law concerns interpretation or application of law, rather than merely reappraising factual evidence. A conflict in High Court decisions arises when High Courts have taken inconsistent legal positions on the same question.
Under Section 257, if an application under Section 256 concerned an ITAT order under Section 254 made before 1 October 1998, and the Tribunal considered a direct reference expedient because of conflicting High Court decisions, it could prepare a statement of the case and refer it through its President directly to the Supreme Court.
Conditions for a direct Supreme Court reference
- The underlying Tribunal order must have been made before 1 October 1998.
- The matter must arise from an application under Section 256.
- A particular question of law must be affected by conflicting decisions of High Courts.
- The ITAT must consider direct reference to the Supreme Court expedient; the statutory wording is discretionary.
- The statement of the case must be sent to the Supreme Court through the Tribunal President.
How the historical reference procedure worked
The ordinary reference route under Section 256 involved an application asking the ITAT to state a question of law for the High Court. Section 257 provided a special alternative where divergent High Court rulings warranted authoritative resolution by the Supreme Court. It did not create an unrestricted appeal from every ITAT order.
Current appellate framework and the 2025 Act
For ITAT orders dated on or after 1 October 1998 under the 1961 Act, the principal statutory route for a substantial question of law was an appeal to the High Court under Section 260A, with a further Supreme Court appeal governed by Section 261 where the High Court certified the case as fit for appeal. Other constitutional remedies, including special leave under Article 136, are distinct and subject to their own requirements.
Under the Income-tax Act, 2025, the comparable appellate provisions include Section 365 (appeal to High Court) and Section 367 (appeal to Supreme Court). The 2025 Act does not turn the historical Section 257 reference into a routine contemporary remedy.
Section 536 of the 2025 Act contains repeal and savings provisions. Proceedings relating to tax years beginning before 1 April 2026 generally continue under the 1961 Act, including the relevant procedural provisions, as prescribed by the transitional framework.
| Provision | Purpose | Relevance |
|---|---|---|
| Section 256, 1961 Act | Reference of question of law to High Court | Historical ITAT orders before 1 October 1998 |
| Section 257, 1961 Act | Direct reference to Supreme Court due to conflicting High Court decisions | Special historical reference route |
| Section 260A, 1961 Act | Appeal to High Court on substantial question of law | Post-September 1998 ITAT orders under saved 1961 Act framework |
| Sections 365 and 367, 2025 Act | High Court and Supreme Court appeals | 2025 Act framework, subject to transition rules |
Legislative history
The Finance (No. 2) Act, 1998 (Act 21 of 1998), Section 56, amended the wording of Section 257 with effect from 1 October 1998 to limit its operation to applications against orders made under Section 254 before that date. The former general reference system was replaced for later Tribunal orders by the High Court appeal framework.
Frequently asked questions
Can the ITAT refer every tax appeal directly to the Supreme Court under Section 257?
No. The provision concerns qualifying pre-1 October 1998 orders and requires conflicting High Court decisions on a question of law.
Does Section 257 apply to a new ITAT order in 2026?
No. It does not provide a direct-reference mechanism for a newly made ITAT order. The applicable appeal provisions and transitional rules must be examined instead.
Is a conflict between High Courts enough by itself?
No. The statutory conditions must also be met, and the Tribunal must consider the direct reference expedient.
Official legal sources
- Income-tax Act, 1961, as amended - Income Tax Department (PDF)
- Income Tax Act, 2025: commencement and savings - Income Tax Department
- Appeals and revisions - Income Tax Department
- Section 261: Appeal to Supreme Court - Income Tax Department
Last reviewed: 27 October 2026. This article explains the statutory framework for general information and is not a substitute for advice on a specific pending case.