Section 260A says nothing about cross-objections, and the Court has held that silence does not take the right away

Justices Rajarshi Bharadwaj and Sudip Deb held that the right to file a cross-objection in an income tax appeal to the High Court need not be spelt out, and declined to follow two decisions to the contrary.

The Revenue appealed to the High Court under Section 260A of the Income Tax Act, 1961 against an order of the Income Tax Appellate Tribunal, and a Division Bench formulated substantial questions of law in March 2020 — among them whether the Tribunal had correctly interpreted and applied Section 80-IA(8) in relation to the assessee's sale of electricity to the Indian Energy Exchange and the Rajasthan Power Procurement Centre.

The assessee then wanted to raise its own points about the parts of the Tribunal's order that went against it. The question that had to be decided first was whether it could: whether Section 260A permits a respondent to file a cross-objection at all, and whether such a cross-objection is sustainable in law. On 14 October 2026 the Court held that it is.

Why the question arises

The difficulty is one of drafting. Section 253 of the Act, which governs appeals to the Tribunal, is a specific provision and expressly regulates the time and manner of filing a cross-objection there. Section 260A, which governs appeals to the High Court, contains no equivalent. The argument for the Revenue was that the omission is deliberate: where Parliament wanted to allow a cross-objection it said so, and its silence in Section 260A excludes one.

Two decisions were cited for that position — Smt. Jyoti Kumari v. Assistant Commissioner of Income-Tax and Principal Commissioner of Income Tax v. Nagar Dairy Pvt. Ltd.

What sub-section (7) does

The Court's answer turns on Section 260A(7), which provides that the provisions of the Code of Civil Procedure, 1908 relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under the section.

The insertion of those words, the Bench held, necessarily includes the right of filing a cross-objection. “Such right need not be spelt out specifically.” Order XLI Rule 22 of the Code is part of the body of provisions relating to appeals to the High Court, and the absence of a separate, self-contained provision about cross-objections in Section 260A is therefore not sufficient to exclude that procedural right.

The contrast with Section 253 was turned against the Revenue rather than for it. Section 253 is a specific provision governing appeals before the Tribunal — a forum to which the Code does not apply in the same way — and so it had to make its own arrangements. Section 260A talks instead about the applicability of the Code to an appeal filed in the High Court, and having done that it did not need to repeat what the Code already provides.

Form and substance

For the character of the right the Court relied on the Supreme Court in Municipal Corporation of Delhi v. International Security & Intelligence Agency Ltd., which observed that the form of a cross-objection is a matter of procedure, whereas the substantive right is the right of appeal.

That distinction matters to the argument from exhaustiveness. There is no doubt, the Bench accepted, that the Income Tax Act is a self-contained and exhaustive code. But it is equally important to note that on a reading of Section 260A(7) the sub-section does not purport in any manner to curtail or restrict the application of the Code. It states only that all the provisions which would apply to appeals under the Code apply to appeals under Section 260A. That does not suggest either that the other provisions of the Code are necessarily excluded or that the High Court's inherent jurisdiction is in any manner affected — a proposition taken from CIT v. Meghalaya Steels Ltd.

On that reasoning the Court recorded that it was not in agreement with the ratio in Smt. Jyoti Kumari or in Nagar Dairy.

The limit on what a cross-objection may contain

The holding is not that a respondent may reopen whatever it likes. The Court was explicit about the boundaries, and they follow from the nature of a Section 260A appeal.

A cross-objection must exclude questions of fact, and matters which do not arise from the order of the Tribunal. It must be confined to the part of the order which is adverse to the respondent. And that part must indicate that it involves a substantial question of law as contemplated by Section 260A.

So the right to file is general; the right to be heard on what is filed is conditional. The Court's conclusion states both limbs together: the right to file a cross-objection in an appeal under Section 260A is maintainable, subject of course to satisfying the Court that the questions framed by the respondent are substantial questions of law and remain within the scope of the section.

What happens next

Having decided the preliminary point, the Bench did not go on to the merits. It listed the appeal for hearing on 30 November 2026 for formulating the substantial questions of law as framed by the respondent in the appeal — that is, for the second stage of the test it had just laid down, at which the assessee's questions will have to be shown to be substantial questions of law arising from the Tribunal's order.

There was no order as to costs. Mr Prithu Dudhoria with Mr Amit Sharma appeared for the appellant and, with Mr Anurag Roy, for the income tax authority; Mr J.P. Khaitan, senior advocate, with Mr Sanjoy Bhaumik and Ms Swapna Das for the assessee. The matter was heard on 13 October 2026 and judgment delivered the next day.