Respondent Cannot File Cross-Objections To Appeal Before High Court U/S 260A Income Tax Act: Delhi High Court

A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar observed, “The Legislature appears to have consciously desisted from adopting principles akin to Order XLI Rule 22 of the Code or specifically introducing provisions enabling the respondent in an appeal under Section 260A to prefer cross-objections.”

The Court contrasted this “conscious silence” as to the right to prefer cross-objections with Section 253 (Appeals to the Appellate Tribunal), which enables both the Revenue as well as the assessee to prefer a cross-objections.

“Section 260A refrains from incorporating a specific provision permitting the filing of a cross-objection. This is in stark contrast to what is provisioned for at the second appeal stage before the Tribunal. Thus, while at the stage of an appeal reaching the board of the Tribunal, both the Revenue as well as the assessee are statutorily enabled to prefer a cross-objection on receipt of notice of an appeal, the Legislature has not made any corresponding or parallel provision in Section 260A.”

Court also highlighted that while cross-objection under Section 253 could be in relation to “any part of such order” which forms the subject matter of the appeal filed before the Tribunal, the right of the respondents in an appeal under Section 260A stands confined to urging that the appeal does not give rise to any “substantial question of law”.

In the case at hand, the Department had preferred an appeal against ITAT disallowing certain additions made by the Assessing Officer. As the respondent-assessee sought to file cross-objections, the Department raised a preliminary objection, leading to this judgment.

The Department had argued that cross-objections would not be maintainable in light of Section 260A of the Act, neither envisaging nor creating such a remedy. It was contended that Section 260A is a remedy of redressal before the High Court in respect of an order passed by the Tribunal provided a substantial question of law arises.

The Department further submitted that the CPC itself does not recognise cross-objection as an avenue to be pursued in an appeal from an appellate decree. Thus, it was contended that it would be wholly incorrect to impute the principles underlying Order XLI Rule 22 CPC as being applicable to an appeal under Section 260A.

The Respondent-assessee, on the other hand, contended that the right to prefer cross-objections should be read into the provisions of Section 260A of the Act, and the provision should not be conferred an interpretation which deprives the assessee of such a right.

It laid stress upon the language in Section 260A(4) that the provisions of CPC, as far as may be applicable, would govern.

The Court, however refused the proposition, stating that the language in which sub-section (4) stands cast stipulates that the appeal would be heard only on the question so formulated, and the right of the respondent at the time of hearing is confined to contending that the case does not involve such a question.

The Court also considered whether Section 260(6) would permit the filing of cross-objections. The provision empowers the High Court, while considering an appeal, to rule on any issue which may have been in its opinion, wrongly decided or not determined by the Tribunal.

Answering in the negative, the Court held,

“The incorrect determination of an issue by the Tribunal is tied to the decision rendered by the Tribunal on the question of law on which the appeal may be liable to be entertained and admitted. The wrongful determination of an issue is thus indelibly connected to that part of the order of the Tribunal and which is referred to in Section 260A(1). Sub-section (6), therefore, could at best be construed as being referrable to the substantial question and a finding of the Tribunal in connection therewith. Thus this too cannot be possibly construed as the embodiment of a right sought to be conferred upon a respondent to raise an issue which is neither connected nor concerned to the question of law on which the appeal comes to be admitted.”

The Court then turned to Section 260A(7), which provides that the provisions of CPC relating to appeals to the High Court shall, as far as may be applicable, also govern appeals instituted under the said provision.

However, it held that this provision too, does not confer a right to on respondent to file cross-objections. It held, “Each statute may create an independent right of appeal and regulate the exercise of such a right subjecting it to such conditions and stipulations as may be considered appropriate. It is for this reason that Section 260A(7) desists from fully or completely adopting the provisions comprised in the Code. The Legislature has thus clearly been circumspect when stipulating that the provisions of the Code would be applicable only to the extent that Section 260A of the Act may envisage or sanction.”

Significant to note that the Karnataka High Court in Smt. Jyoti Kumari v. Asst. CIT (2010) held that a cross-objection would not be maintainable in an appeal under Section 260A.

Appearance: Mr. Sanjay Kumar, Ms. Monica Benjamin & Ms. Easha, Advs. for Appellant; Mr. Ved Jain, Mr. Nischay Kantoor & Ms. Soniya Dodeja, Advs for Respondent

Case title: Pr. Commissioner Of Income Tax (Central)-2 v. Nagar Dairy Pvt. Ltd.

Citation: 2025 LiveLaw (Del) 268

Case no.: ITA 320/2023 and batch

Click here to read order