Cross-Objections not Maintainable u/s 260A of Income Tax Act: Delhi High Court [Read Order]

In a recent ruling, the Delhi High Court held that cross-objections are not maintainable under Section 260A of the Income Tax Act, clarifying that the provision does not allow respondents in tax appeals to file objections against findings that were adverse to them.

A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar observed that the Legislature deliberately refrained from incorporating a provision allowing cross-objections under Section 260A unlike Section 253 of the Income Tax Act, which permits both the assessee and the Revenue to file cross-objections before the Income Tax Appellate Tribunal ( ITAT ).

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The dispute arose when the Income Tax Department challenged the ITAT’s decision disallowing certain additions made by the Assessing Officer (AO), the Nagar Dairy Pvt. Ltd (assessee) sought to file cross-objections against the Tribunal’s ruling on Section 153C and other findings that were adverse to them.

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The revenue counsel opposed the cross-objections, arguing that Section 260A does not envision such a right and that appeals under this section are confined to questions of law framed at admission. They further argued that even under the Civil Procedure Code (CPC), cross-objections are not allowed in second appeals, which makes them inapplicable to Section 260A of the Income Tax Act which functions similarly to a second appeal under tax laws.

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The respondent-assessee countered that the right to cross-objections should be read into Section 260A, arguing that denying this right would leave them without a remedy to challenge findings against them. The assessee’s counsel pointed to Section 260A(4), which states that CPC provisions apply "as far as may be", claiming this should include cross-objections.

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The court rejected the respondent-assessee’s argument clarifying that Section 260A(4) only allows the respondent to argue that the appeal does not involve a substantial question of law, not to introduce new objections.

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The court also examined Section 260A(6), which allows the High Court to rule on any issue incorrectly decided or left undetermined by the tribunal, but ruled that this provision does not grant respondents the right to file cross-objections.

The court reasoned that an incorrect determination of an issue must be linked to the substantial question of law admitted in the appeal and cross-objections that introduce independent challenges are not permitted.

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Finally, turning to Section 260A(7), which states that CPC provisions apply to High Court appeals under this section, the court held that this does not extend to cross-objections, as the Legislature intentionally refrained from fully adopting CPC provisions into tax appeals.

The court explained that each statute defines its own appeal rights, and Section 260A does not authorize cross-objections in any form. The court dismissed the cross-objections filed by the assessee-respondent.

To Read the full text of the Order CLICK HERE

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