Decided on April 02,1993



- (1.)IS the High Court powerless to grant a stay against the realisation of tax in an application made by the assessee under Section 256(2) of the Income-tax Act, 1961 ? This question falls for determination in this civil miscellaneous petitions filed by the Revenue for vacation of a stay order granted by this court on November 24, 1992.
(2.)THE controversy arises out of the assessee's application filed under Section 256(2) seeking a direction to the Tribunal to refer certain questions, said to be questions of law, to this court for opinion. THE application was admitted for hearing on November 24, 1992, and the Income-tax Officer's assessment order was stayed. THE Revenue seeks vacation of this order and that is how the matter is before us.
Any attempt to answer the question posed would naturally turn to the nature of jurisdiction possessed by the High Court under Section 256 of the Act. If this jurisdiction can be said to be appellate, revisional or supervisory, the court would certainly have power to grant the stay pending disposal of the application. In any other case, it would require to be examined whether the court possesses any such power at all.

Before adverting to the jurisdictional aspect, a brief reference to the terms of Section 256 which confers the reference jurisdiction on this court would be in order. The section provides that an assessee or the Commissioner may, by an application, require the Appellate Tribunal to refer to the High Court any question of law arising out of the order of the Tribunal and to draw up a statement of the case in this regard. Sub-section (2) lays down that if the Tribunal rejects the application under Sub-section (1), the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of such refusal, apply to the High Court which, if not satisfied with the correctness of the decision of the Appellate Tribunal, may direct it to state the case and refer formulated questions of law for its opinion. As would be evident, the provision confers a special and limited jurisdiction on the High Court which, in essence, is purely advisory in nature and confined to a decision on such questions of law as may be referred to the court for its opinion. While exercising it, the court can neither raise any question by itself nor dispose of the whole matter. Its total domain extends to answering those questions which are referred to it and to determine whether a question of law arises in a particular case.

(3.)THEREFORE, the jurisdiction enjoyed by the High Court in a reference under Section 256 is neither appellate nor revisional or supervisory. While exercising it, the court does not sit in appeal over the judgment of the Tribunal. Nor can it correct any error of fact or law in the decision of the Tribunal. Consequently, it has no power to grant any stay which power is normally incidental and ancillary to the types of jurisdiction referred to hereinabove. This view finds support in the Supreme Court judgment in CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 (SC), wherein it was held thus :
"The jurisdiction of the High Court in a reference under Section 256 is a special one different from its jurisdiction as a civil court. The High Court hearing a reference under that section did not exercise any appellate or revisional or supervisory jurisdiction over the Tribunal. It acted purely in an advisory capacity on a reference which properly came before it under Section 256. ..."

Even so, it remains to be seen whether the High Court can grant a stay under its inherent power. It is true that the High Court is not deprived of its inherent jurisdiction or judicial capacity while hearing a reference under Section 256. But that by itself cannot be stretched to mean that it can pass any order it likes, more so when its basic jurisdiction is special and limited. The inherent power in such a case can at best extend to procedural matters relating to hearing of references and to passing of such orders as may be ancillary or incidental to the advice which the court proposes to give. But in no case can it be said that the court enjoys inherent power to pass orders restraining the forums created by the Act from giving effect to their orders. If the court could not do so while passing final orders, it is naturally incompetent to do so as an interim measure in the purported exercise of its inherent powers.

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