Third-party intervention in income-tax reference barred where no direct legal prejudice or statutory right exists.

The right to seek assessment-related relief under the Income-tax Act is confined to the assessee and the Department, so a third party with no direct legal prejudice from the assessment has no statutory right to appeal, seek a reference on a question of law, or intervene in reference proceedings under section 256. In the absence of any provision conferring intervention rights and given the limited reference jurisdiction, the intervention application was held not maintainable and was dismissed.

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Issues: Whether a third party could intervene in a reference under section 256 of the Income-tax Act, 1961.

Analysis: The right to seek assessment-related relief under the Act is confined to the assessee and the Department. A person who is not directly affected by the assessment has no statutory right to appeal, to request a reference on a question of law, or to intervene in proceedings arising from such a reference. The absence of any provision conferring intervention rights, coupled with the limited reference jurisdiction under section 256 and the lack of suo motu power to entertain such intervention, barred the application. The applicant also failed to show any direct legal prejudice from the assessment proceedings.

Conclusion: The application for intervention was not maintainable and was dismissed.

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