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Issues:
- Whether the High Court has the power to grant a stay against the realization of tax in an application made by the assessee under section 256(2) of the Income-tax Act, 1961. Analysis: The judgment in question revolves around the issue of whether the High Court possesses the authority to grant a stay against the realization of tax when an assessee files an application under section 256(2) of the Income-tax Act, 1961. The controversy originated from the assessee's application under section 256(2) seeking a direction for the Tribunal to refer certain questions of law to the High Court for opinion. The application was admitted, and the Income-tax Officer's assessment order was stayed, leading the Revenue to seek vacation of this order. The fundamental query is whether the High Court's jurisdiction under section 256 can be categorized as appellate, revisional, or supervisory, determining its power to grant a stay during the pendency of the application. The court delves into the nature of the jurisdiction conferred by section 256 of the Income-tax Act. The provision allows an assessee or the Commissioner to request the Appellate Tribunal to refer questions of law arising from the Tribunal's order to the High Court for opinion. It is observed that the High Court's jurisdiction under section 256 is unique, advisory, and limited in scope. The court's role is restricted to answering the referred questions of law and determining if a legal issue arises in the case. The High Court does not possess appellate, revisional, or supervisory powers over the Tribunal's decision, nor can it correct factual or legal errors in the Tribunal's judgment. The judgment cites the Supreme Court decision in CIT v. Scindia Steam Navigation Co. Ltd., emphasizing that the High Court's role in a reference under section 256 is distinct from its civil court jurisdiction and is purely advisory. The court's jurisdiction is circumscribed to addressing the referred legal questions and providing opinions on them. While the High Court retains its inherent jurisdiction and judicial capacity during a section 256 reference, it is clarified that this inherent power is limited to procedural matters related to the reference and cannot extend to granting stays against the enforcement of orders by statutory forums. Referring to the Supreme Court ruling in CIT v. Bansi Dhar and Sons, the judgment underscores the separation of the High Court's jurisdiction under section 256 from inherent or incidental powers. It is reiterated that the High Court's jurisdiction under section 256 is specific and conferred by the Income-tax Acts for obtaining the court's opinion on legal questions. The court is not empowered to grant stays or interim injunctions while dealing with a reference under section 256, as such powers fall within the domain of appellate authorities. Consequently, the High Court, in this case, is deemed incompetent to grant a stay, leading to the vacation of the stay order dated November 24, 1992, and the disposal of the civil miscellaneous petition.
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