Reference application maintainability under income-tax law fails when the Tribunal rejects the original request as time-barred.

An application under section 256(2) of the Income-tax Act, 1961 is competent only where a valid section 256(1) application was made and the Tribunal refused to state the case on the ground that no question of law arose. Rejection of the section 256(1) application as time-barred is not such a refusal on merits. The contrast with section 66(3) of the 1922 Act shows that the former statute contained no equivalent remedy for delay. On that basis, the section 256(2) applications were not maintainable and were rightly dismissed.

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Issues: Whether an application under section 256(2) of the Income-tax Act, 1961 lies when the Tribunal has rejected the corresponding application under section 256(1) as time-barred and has not refused to state a case on the ground that no question of law arises.

Analysis: For an application under section 256(2) to be competent, there must first be a valid application under section 256(1) and the Tribunal must have declined to state the case on the specific ground that no question of law arises. A rejection of the section 256(1) application as barred by limitation is not such a refusal on merits. The contrast with section 66(3) of the Income-tax Act, 1922 shows that the earlier statute expressly provided a remedy in time-bar cases, whereas the 1961 Act contains no corresponding provision. The Tribunal in this case did not decide that the proposed questions were not questions of law, but rejected the applications only as time-barred.

Conclusion: The applications under section 256(2) were not maintainable and were rightly dismissed.

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