Cross-objection would not be maintainable in an income tax appeal to High Court under Section 260A
In a recent judgment, Delhi High Court has held that cross-objection would not be maintainable in an income tax appeal to High Court under Section 260A of Income Tax Act, 1961.
ABCAUS Case Law Citation:
4442 (2025) (03) abcaus.in HC
Important Case Laws relied upon by Parties:
Palasseri Velayudhan v. Palasseri Ithayi
Smt. Jyoti Kumari v. Asst. CIT
B. Subba Reddy, Banarsi v. Ram Phal
In the instant case, the Hon’ble High Court disposed of the preliminary objection raised by the Income Tax Department with respect to the maintainability of the cross-objections filed by the respondent-assessee.
In the instant case the ITAT had partly allowed the appeal of the assessee against which the Department had preferred an appeal u/s 260A before the Hon’ble High Court. In response, the respondent assessee filed cross objections.
The Revenue argued that the cross-objections would not be maintainable in light of Section 260A of the Act which neither envisage nor create such a remedy. According to the Revenue, 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. It was their contention that the provision itself enables the Income Tax Department or an assessee to institute such an appeal against an order of the Tribunal and the same being liable to be entertained only if it were to give rise to a substantial question of law.
It was further averred that even the language and structure of the provision is not demonstrative of an implied intent of a cross-objection being maintained.
It was also argued that it would be wholly incorrect to impute the principles underlying Order XLI Rule 22 of the Civil Procedure Code, 1908 as being applicable to an appeal referrable to Section 260A of the Act. According to the Revenue, a cross-objection has not been recognised as an avenue available to be pursued in an appeal from an appellate decree under the Code itself.
On the other hand the assessee contended that any finding or conclusions rendered by High Court on the question as poised would result in the respondent being left remediless to assail the conclusions rendered by the Tribunal.
It was submitted that Section 260A should not be conferred an interpretation which deprives the assessee of such a right especially when some High Courts have held that a cross-objection would be maintainable even at the second appeal stage and to which the provisions of the Code would apply.
The Hon’ble High Court observed that only Karnataka High Court had considered and conclusively held that a cross-objection would not be maintainable in an appeal under Section 260A. The Karnataka High Court had ultimately come to hold that since a cross-objection would not be maintainable in a second appeal instituted in terms of the Code, a fortiori that right cannot be read into Section 260A of the Act. Further, the question of whether a cross-objection would be maintainable in a second appeal is concerned, the only decision that was cited for consideration was that rendered by a Judge of the Kerala High Court.
The Hon’ble High Court observed that Section 260A appeal remedy came to be inserted in the statute book by virtue of Finance (No. 2) Act, 1998 with effect from 01 October 1998. Section 260A ordains that an appeal would lie to the High Court from every order passed by the Tribunal.
The Hon’ble High Court noted that Section 260A(7) provides that the provisions of the Code relating to appeals to the High Court shall, as far as may be applicable, also govern appeals instituted under the said provision. However, the section 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.
The Hon’ble High Court observed that 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. There is a conscious silence in light of the contrast with Section 253 alongside Section 260A.
The Hon’ble High Court observed that 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 by filing a memorandum in that regard. That cross-objection could be in relation to “any part of such order” and which forms the subject matter of the appeal filed before the Tribunal. The Legislature has, however, chosen not to introduce any corresponding or parallel provision in Section 260A
The Hon’ble High Court held that absent a specific adoption of a right to prefer cross-objections and the same being statutorily acknowledged to be part of the appeal procedure laid out in Section 260A of the Act, a cross-objection would not be maintainable. Section 260A(6) is merely an enabling provision and which empowers a respondent to agitate an issue that may have been decided against it by the Tribunal subject to the condition that the same is indelibly connected with the decision which gives rise to the question of law on which we admit an appeal.
Accordingly, the Hon’ble High Court upheld the objection of the Income Tax Department on the point of maintainability of the cross objections.
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