Income-tax law | Appeals and judicial procedure

Section 259 of the Income-tax Act, 1961: High Court Bench of Two or More Judges

Section 259 deals with the number of judges who hear a case referred to a High Court under Section 256 and the method of resolving an equal division of judicial opinion. It belongs to the older reference procedure. For ordinary appeals against Income-tax Appellate Tribunal orders, the comparable rule is Section 260B of the 1961 Act and Section 366 of the Income-tax Act, 2025.

Important distinction: Section 259 applies by its terms to cases referred under Section 256. It is not the principal provision governing the bench hearing a modern appeal under Section 260A. The latter is Section 260B. The 2025 Act provides for High Court appeals under Sections 365 and 366. The law applicable to an individual matter depends on the relevant year and transitional provisions.

What does Section 259 provide?

Sub-section (1): Minimum two judges

Where a case has been referred to the High Court under Section 256, the High Court must hear it through a bench of at least two judges. The decision follows the opinion of those judges or, if there are more than two, their majority opinion.

Sub-section (2): Difference of opinion

When the judges are equally divided and no majority emerges, they must identify the precise point of law on which they differ. One or more other judges of the same High Court then hear that point alone. The point is resolved by the majority opinion of all judges who heard it, including the judges who originally heard the case.

Why does Section 259 refer to Section 256?

Section 256 established a procedure for seeking a statement of case from the Appellate Tribunal on a question of law arising from certain Tribunal orders passed before 1 October 1998. Section 259 sets the bench procedure for such references. Section 257 separately dealt with direct reference to the Supreme Court in certain circumstances, and Section 258 dealt with supplementation of a statement of case.

These provisions are important for understanding legacy proceedings, but they should not be confused with the later statutory appeal system. The historical reference route was replaced for subsequent Tribunal orders by the appeal framework in Section 260A.

Section 259 compared with current High Court appeal rules

Provision	Application	Bench rule
Section 259, Income-tax Act, 1961	References under Section 256	At least two High Court judges; procedure for resolving an equal split
Section 260B, Income-tax Act, 1961	High Court appeals under Section 260A	At least two High Court judges; similar split-opinion procedure
Section 366, Income-tax Act, 2025	High Court appeals under Section 365	At least two High Court judges; majority and difference-of-opinion procedure

Appeals involving a substantial question of law

Under Section 260A of the 1961 Act, an appeal from an order of the Income-tax Appellate Tribunal to the High Court generally requires a substantial question of law. This means a legal issue of real significance to the decision, rather than merely a request to reweigh facts. Section 260B governs the composition of the High Court bench in such an appeal.

For the 2025 Act, Section 365 concerns appeals to the High Court and Section 366 governs the bench hearing the appeal. The Income Tax Department explains that the appellate hierarchy remains materially unchanged and that pending proceedings are subject to the savings provisions, including Section 536(2)(e).

Illustration: Two judges disagree

Suppose two High Court judges hear a qualifying tax matter and disagree on a legal question. Rather than treating either view as the judgment of the court, the differing legal point is stated and referred for hearing by another judge. If the third judge agrees with one of the original judges, the majority view on that point governs. The procedure does not ordinarily require the entire appeal to be reheard on every issue.

Official legal references

Frequently asked questions

Does Section 259 require at least two judges?

Yes. It requires a bench of not less than two judges for cases referred under Section 256.

What happens when two judges disagree?

The disputed point of law is heard by one or more additional High Court judges and decided according to the majority of all judges who heard that point.

Which provision governs modern High Court tax appeals?

Section 260B governs the bench for appeals under Section 260A of the 1961 Act. Under the 2025 Act, the comparable provisions are Sections 365 and 366, subject to applicable transitional rules.

Editorial note: This article explains statutory procedure for general information. For a pending case, verify the governing enactment, court rules, and any subsequent amendments or binding judgments.