2016 (11) TMI 1049 - HC - Income Tax

Court dismisses Cross Objection for non-removal of office objections, applicant can seek appeal.

The court concluded that the Cross Objection was not maintainable as the appeal was rejected for non-removal of office objections. The applicant was given ... Order 41 Rule 22 (Cross objection limitation and hearing) - notice of date fixed for hearing - hearing on merits - rejection of appeal for non removal of office objections distinguished from dismissal for default - Rule 907 Bombay High Court (Original Side) Rules - treating cross objection as cross appealOrder 41 Rule 22 (Cross objection limitation and hearing) - notice of date fixed for hearing - hearing on merits - rejection of appeal for non removal of office objections distinguished from dismissal for default - Maintainability of the Cross Objection filed by the assessee where the Revenue's appeal was rejected for non removal of office objections before being admitted or heard on merits. - HELD THAT: - Order 41 Rule 22 permits a respondent to file a cross objection within one month from service of notice of the date fixed for hearing of the appeal and sub rule (4) enables the court to hear a cross objection even if the original appeal is withdrawn or dismissed for default. The Court analysed whether those provisions or Rule 907 of the Bombay High Court (Original Side) Rules would permit a cross objection to be entertained where the appeal was rejected at a preliminary stage for non removal of office objections and was never admitted or heard on merits. The court held that service of a notice of a preliminary listing or appearance does not amount to the notice contemplated by Rule 22 unless the appeal has been admitted and fixed for hearing so that the court has assumed jurisdiction to consider the appeal on merits. A clear distinction was drawn between an appeal dismissed for default (or withdrawn) after being on the court file and an appeal rejected for non removal of office objections before admission; the latter does not leave the appellate court having assumed jurisdiction to hear the appeal on merits. Rule 907 permits treating a cross objection as a cross appeal only where an appeal 'fails to come to a hearing on the merits' while the appeal remains on the court's file; it does not empower the respondent to seek such remedy where the appeal has been rejected for non removal of office objections and thus never admitted. Applying these principles, the Court found that the appeal in issue was never taken on the file for hearing on merits and consequently the cross objection cannot be entertained on merits. [Paras 19, 20, 23, 25, 27]Cross Objection is not maintainable and is dismissed.Final Conclusion: The Cross Objection filed in respect of A.Y. 2000 2001 is dismissed as not maintainable because the Revenue's appeal was rejected for non removal of office objections and was never admitted or heard on merits; the applicant remains at liberty to file an appeal and seek condonation of delay, if so advised. Issues Involved:1. Maintainability of the Cross Objection after the rejection of the Income Tax Appeal for non-removal of office objections.2. Interpretation and application of Order 41 Rule 22 of the Code of Civil Procedure.3. The effect of non-compliance with office objections on the appeal and the Cross Objection.4. The distinction between rejection and dismissal for default of an appeal.Detailed Analysis:1. Maintainability of the Cross Objection:The primary issue is whether the Cross Objection is maintainable after the Income Tax Appeal was rejected for non-removal of office objections. The court noted that the appeal was rejected on 9th November 2010 due to non-compliance with office objections, and the Cross Objection was filed within the prescribed time. The applicant argued that the Cross Objection is maintainable as it was filed after receiving notice of the hearing of the appeal.2. Interpretation and Application of Order 41 Rule 22:Order 41 Rule 22 allows a respondent to file a Cross Objection within one month from the date of service of notice of the day fixed for hearing the appeal. The court examined the Supreme Court's decision in Mahadev Govind Gharge, which clarified that the limitation period for filing a Cross Objection starts from the date of service of notice of the hearing. The court emphasized that the Cross Objection can be entertained even if the original appeal is withdrawn or dismissed for default.3. Effect of Non-Compliance with Office Objections:The court highlighted the importance of complying with office objections as part of the justice administration system. Non-removal of objections signifies a conscious decision by the litigant not to pursue the case. The court distinguished between 'rejection' of a case for non-compliance with office objections and 'dismissal for default,' which indicates non-compliance with a court order. In this case, the appeal was rejected for non-removal of office objections, not dismissed for default.4. Distinction Between Rejection and Dismissal for Default:The court noted that the appeal was never registered on the court's file and was rejected at a preliminary stage for non-removal of office objections. The court held that the Cross Objection could not be entertained because the appeal was not pending and had not been heard on merits. The court referred to various judgments to support its view that a Cross Objection can only be entertained if the appeal is pending and the court has assumed jurisdiction to hear it.Conclusion:The court concluded that the Cross Objection is not maintainable as the appeal was rejected for non-removal of office objections. The court allowed the applicant to file an appropriate application to treat the Cross Objection as an appeal and seek condonation of delay if so advised. The Cross Objection was dismissed, and there was no order as to costs.