'No Independent Right to Cross-Objections Under Section 260A': Delhi HC [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) affirmed the limited scope of Section 260A(6) and rejected cross-objections in the Income Tax Appeal.

In this case, the appellants are the department, and the appeals have been filed from the order dated 24-11-2022 passed by the Income Tax Appellate Tribunal (ITAT).

These appeals stem from a tax raid carried out on 17-09-2010 at the Nagar Dairy Group under the Income Tax Act. During the raid, officials also found documents related to the respondent at the offices of M/s AIMS Promoters Pvt. Ltd. This discovery triggered further action under Section 153C of the Income Tax  Act, 1961.

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 The appellants argued that Section 260A does not explicitly or implicitly allow for cross-objections. They believe it’s wrong to apply the principles of Order XLI Rule 22 of the Civil Procedure Code here, especially since cross-objections aren’t recognised in appeals under that section of the Code either.

The assessee’s counsel submitted before the high court 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 counsel further argued that if the respondents' objection to the cross-objection is accepted, they would lose their right to challenge the case, no matter how the court later rules on the main legal issue.

The assessee’s counsel also submitted that the right to prefer cross-objections should be read into the provisions of Section

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The bench relied on the case of Smt. Jyoti Kumari v. Asst. CIT, in which the Karnataka High Court had held that 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.

The bench observed that Section 260A(6) of the Income Tax Act is more restrictive and does not mention cross-objections, unlike Section 253(4), which clearly allows them.

The High Court observed that “Section 260A(6) is merely an enabling provision that 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.”

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The bench held that the provisions of Section 260(A) of the Income Tax Act, 1961, do not give an independent right to the respondent to raise a challenge divorced or isolated from the question on which the appeal comes to be admitted.

Justice Yashwant Varma upheld the appellant's objection on the point of maintainability.

To Read the full text of the Order CLICK HERE

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