Taxpayers can file cross-objections in High Court appeals under Income Tax Act, Calcutta HC rules

The High Court had admitted the Revenue’s appeal under Section 260A of the Income Tax Act, 1961, and formulated substantial questions of law.

Birla Corporation filed a cross-objection raising questions that the Court considered linked to a reframed question concerning Section 14A and Rule 8D.

The cross-objection’s questions had not yet been admitted.

The Court therefore considered its maintainability before addressing the substantive issues.

Whether a respondent may file a cross-objection in an appeal before the High Court under Section 260A of the Income Tax Act, 1961, by virtue of Section 260A(7) and Order XLI Rule 22 of the Code of Civil Procedure, 1908?

Whether such a cross-objection must itself raise a substantial question of law within the scope of Section 260A?

Section 260A(7) of the Income Tax Act provides that, save as otherwise provided in that Act, the CPC provisions relating to appeals to the High Court apply, as far as may be, to appeals under Section 260A.

Order XLI Rule 22 CPC permits a respondent who has not appealed to support the decree and to file a cross-objection against an adverse part of it; Order XLII Rule 1 applies Order XLI, as far as may be, to appeals from appellate decrees.

Section 100 CPC governs second appeals on substantial questions of law, while Section 103 concerns the High Court’s power to determine certain issues of fact in a second appeal.

The Court also relied on Hari Shankar Rastogi v. Sham Manohar regarding cross-objections in second appeals, Bikram Singh v. Principal Commissioner of Income-Tax on the nature of a Section 260A appeal, and Municipal Corporation of Delhi v. International Security & Intelligence Agency Ltd. on the procedural character of a cross-objection.

The Court read Section 260A(7) as incorporating applicable CPC procedures into Section 260A appeals.

Because Order XLI Rule 22 permits cross-objections and Order XLII applies Order XLI to second appeals, the Court found no incompatibility between that procedure and Section 260A.

The absence of an express cross-objection provision in Section 260A did not exclude the procedural right, particularly given the Court’s view that a Section 260A appeal is akin to a second appeal.

The Court distinguished Section 253, which expressly governs cross-objections before the Tribunal, from Section 260A, which incorporates CPC appeal procedure.

It nevertheless held that a cross-objection cannot expand the High Court’s jurisdiction: it must concern an adverse part of the Tribunal’s order and raise a substantial question of law under Section 260A.

It declined to follow Smt. Jyoti Kumari v. Assistant Commissioner of Income-Tax and Principal Commissioner of Income-Tax v. Nagar Dairy Pvt. Ltd.

The appeal was listed for hearing on 30 November 2026 to consider formulation of the substantial questions of law raised by the respondent; there was no order as to costs.