TaxTMI 
TaxTMI 
2025 (3) TMI 231
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....jections filed by the respondent-assessee. 2. The appeals emanate from an order dated 24 November 2022 passed by the Income Tax Appellate Tribunal [Tribunal] and had originally posited the following questions of law for our consideration: "A. Whether the Ld. ITAT has erred in law on the facts of the case in confirming the order of the Ld. CIT (A) on account of unexplained purchases amounting to Rs. 1,77,31,37,509/- while holding that the books of accounts of the assessee were defective? B. Whether the Ld. ITAT has erred in law on the facts of the case in not upholding the action of the AO in disallowance of Rs. 1,08,34,15,088/- under Section 40A (3) of the Act and in holding that no addition was made by the AO under Section 40A (3) whereas the AO had categorically mentioned this addition in order and also initiated penalty under Section 271 (l) (c) of the Act, though no separate addition was made considering the disallowance of higher amount on account of bogus purchases? C. Whether the Ld. ITAT has erred in law on the facts of the case in adjudicating the addition made under Section 40A (3) of the Act when the assessee had not taken any ground in this....
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....nt is not an abated assessment owing to the recording of satisfaction and issue of notice u/s 153C on 26.09.2012 and filing of the regular return of income on 30.09.2011. The assessment cannot be said to be unabated. Hence, the judgment in the case of PCIT Vs. Kabul Chawla 380 ITR 573 is not applicable to the instant case. Accordingly, we do not find merit in the Ground No. 2 of the C.O. Thus, we dismiss the Ground No. 2 of the C.O. In view of the same, the issues are being examined on merits of the case in the appeal of the revenue along with Ground No. 3 of the Cross Objection." The appeals preferred by the assessee, however, came to be partly allowed and which led to the institution of the present appeals. 5. The appellants argue that the cross-objections would not be maintainable in light of Section 260A of the Act neither envisaging nor creating such a remedy. According to learned counsels, Section 260A is a remedy of redressal before the High Court in respect of an order passed by the Tribunal provided a substantial question of law arises. It was their contention that the provision itself enables the Income Tax Department or an assessee to institute such an app....
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....ch assessment, the appellant, learned counsel argued, would clearly not be an aggrieved party. The appeal of the Department, Mr. Kantoor submitted, would thus be confined to the deletion of the various additions which were made in the course of assessment. 9. According to learned counsel, the respondent, however, faces the spectre of the High Court either accepting the challenge which stands raised at the behest of the Department or affirming the view expressed by the Tribunal. While in the case of the latter, the assessee may not be prejudiced if the High Court were to dismiss the appeal, it would stand permanently deprived of the right to question or assail the rendering of opinion by the Tribunal on the invocation of Section 153C of the Act. Learned counsel argued that the issue of whether Section 153C was validly invoked undoubtedly strikes at the root of the jurisdiction which was exercised by the Assessing Officer [AO]. It was pointed out that the assessee had argued before the Tribunal that there was no incriminating material which would have justified the invocation of that provision and which undoubtedly is a sine qua non for the commencement of search assessment procee....
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....eal instituted in terms of the Code, a fortiori that right cannot be read into Section 260A of the Act. 13. The decision in Jyoti Kumari is based on the High Court having noticed some of the landmark decisions rendered by the Supreme Court in the context of the right to prefer a cross-objection as contemplated by Order XLI Rule 22 as well as various other High Courts which appear to have taken conflicting views with respect to the filing of cross-objection in a second appeal. The principal decisions of the Supreme Court which were noticed by the Karnataka High Court were those in Superintending Engineer v. B. Subba Reddy (1999) 4 SCC 423 and Municipal Corpn. of Delhi v. International Security & Intelligence Agency Ltd. (2004) 3 SCC 250. 14. However, it would be pertinent to note that none of the decisions of the Supreme Court cited above were concerned with the maintainability of cross-objections in a second appeal nor does that question appear to have been raised or answered. Those decisions had principally ruled on the scope of Order XLI Rule 22 of the Code and the extent of the right inhering in a party-respondent to assail a part of the judgment or decree operating agains....
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....nferred a right to prefer a cross-objection to the decree in the same manner as they would have by way of an appeal. Post the 1976 amendments, the provision as it stands now explicitly enables the respondent to also assail the correctness of a finding contained in the judgment under appeal rendered upon an issue and assert that the same ought to have been decided in its favour. The aforesaid right which the statute now confers is in addition to it being open to the respondent to not only support the decree but to also prefer a cross-objection to the decree itself. The three recourses which are open for the respondent to adopt were elaborately explained by the Supreme Court in B. Subba Reddy, Banarsi v. Ram Phal (2003) 9 SCC 606 and International Security & Intelligence Agency. 17. Explaining the scope of Order XLI Rule 22 of the Code, the Supreme Court in B. Subba Reddy summed up the legal position in the following terms: "23. From the examination of these judgments and the provisions of Section 41 of the Act and Order 41 Rule 22 of the Code, in our view, the following principles emerge: (1) Appeal is a substantive right. It is a creation of the statute. Right ....
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.... interest to 18% per annum and thus interfering in the decree of the trial court." 18. As is evident from the above, in B. Subba Reddy the Supreme Court was principally examining the issue of whether a cross-objection would be maintainable in appellate proceedings referable to Section 39 of the Arbitration and Conciliation Act, 1996 [Arbitration Act]. It was in that aforesaid context that it observed that a cross-objection has all the trappings of an appeal since it could be continued and determined even if the principal appeal came to be withdrawn. It was further observed that the right conferred by Order XLI Rule 22 of the Code is intended to enable the respondent to seek closure of the entire litigation and for all questions being finally laid to rest even in situations where the judgment or decree may be only partly against its interest. 19. However, the Supreme Court in B. Subba Reddy categorically held that an appeal is a substantive right and essentially a creation of the statute. It was thus explained that a right to appeal cannot be claimed to be one which inheres in a party and that it must be founded upon a specific statutory conferment. It was in the aforesaid bac....
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....as he was not the person aggrieved by the decree. Under the amended CPC, read in the light of the explanation, though it is still not necessary for the respondent to take any cross-objection laying challenge to any finding adverse to him as the decree is entirely in his favour and he may support the decree without cross-objection; the amendment made in the text of sub-rule (1), read with the explanation newly inserted, gives him a right to take cross-objection to a finding recorded against him either while answering an issue or while dealing with an issue. The advantage of preferring such cross-objection is spelled out by sub-rule (4). In spite of the original appeal having been withdrawn or dismissed for default the cross-objection taken to any finding by the respondent shall still be available to be adjudicated upon on merits which remedy was not available to the respondent under the unamended CPC. In the pre-amendment era, the withdrawal or dismissal for default of the original appeal disabled the respondent to question the correctness or otherwise of any finding recorded against the respondent." 21. Insofar as case (i) was concerned and where the decree partly be against the....
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....on partakes of the right to prefer an appeal. When the impugned decree or order is partly in favour of one party and partly in favour of the other, one party may rest contented by his partial success with a view to giving a quietus to the litigation. However, he may like to exercise his right of appeal if he finds that the other party was not interested in burying the hatchet and proposed to keep the lis alive by pursuing the same before the appellate forum. He too may in such circumstances exercise his right to file appeal by taking cross-objection. Thus taking any cross-objection to the decree or order impugned is the exercise of right of appeal though such right is exercised in the form of taking cross-objection. The substantive right is the right of appeal; the form of cross-objection is a matter of procedure. 16. Though the statement of law made hereinabove flows simply by the reading of the relevant statutory provisions yet some available decisions may also be noticed. In Bhadurmal v. Bizaatunnisa Begum [AIR 1964 AP 365 : (1964) 1 An WR 290] a Division Bench presided over by Jaganmohan Reddy, J. (as His Lordship then was) held cross-objection to be maintainable in an....
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....e Supreme Court from every order made by the High Court under Section 98 or Section 99 of that Act. Section 116-C provides for every such appeal being heard and determined by the Supreme Court as nearly as may be in accordance with the procedure applicable to the hearing and determination of any appeal from any final order passed by the High Court in exercise of its original civil jurisdiction subject to the provisions of that Act and the Rules, if any. All the provisions of the Code of Civil Procedure, 1908 and rules of the court shall, so far as may be, apply in relation to such appeal. P.B. Gajendragadkar, J. (as His Lordship then was) speaking for the Court observed : (AIR p. 99, para 11) "There is no doubt that, in an ordinary civil appeal, the respondent would be entitled to support the decree under appeal on grounds other than those found by the trial court in his favour. Order 41 Rule 22 of the Code of Civil Procedure which permits the respondent to file cross-objections recognize the respondent's right to support the decree on any of the grounds decided against him by the court below. In the present case no appeal could have been preferred by Respondent 1 beca....
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.... be inconsistent with the provisions of the Code of Civil Procedure, 1908 in which case the applicability of the latter shall stand excluded but only to the extent of inconsistency. We may hasten to add that to the extent of our disagreement with the law laid down in B. Subba Reddy case [(1999) 4 SCC 423] the proposition appears to have been rather widely stated in that case. In fact the question before the Court in B. Subba Reddy case [(1999) 4 SCC 423] was whether cross-objection seeking the relief of award of interest at a higher rate was maintainable though such an order did not fall within the purview of Section 39 (1) of the Act. 20. Once we hold that by taking cross-objection what is being exercised is the right of appeal itself, it follows that the subject-matter of cross-objection and the relief sought therein must conform to the requirement of Section 39 (1). In other words, a cross-objection can be preferred if the applicant could have sought for the same relief by filing an appeal in conformity with the provisions of Section 39 (1) of the Act. If the subject-matter of the cross-objection is to impugn such an order which does not fall within the purview of any o....
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....ng the appeal or within such further time as the appellate court may see fit to allow. This provision is applicable to second appeals also and the right to file cross objections in a second appeal has not been taken away by the amended Section 100 or by any other provision introduced by the amendment, argues counsel. He has also cited various judicial pronouncements in support of this contention. 14. Rule 1 of Order 42 makes the rules of Order 41 so far as may be applicable to appeal as from appellate decrees. Rule 2 introduced by the amendment of 1976 only refers to the power of court to direct that the appeal be heard on the questions formulated by it. That was inserted in consequence to the amendment made in Section 100. Still Rule 1 of Order 42 remained unchanged. The question whether the provisions contained in Rule 10 of Order 41 apply to appeals under Letters Patent came up for consideration before the Privy Council in Sabitri Thakurain v. Savi, AIR 1921 PC 80, where it was held that the provision applies to appeals under Letters Patent as to appeal under the Civil Procedure Code. The Madhya Pradesh High Court in the decision in Satyabhamadevi v. Ramkishore, AIR 197....
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....ions "so far as may be" are made applicable. The Nagpur High Court in Kesho Bhika v. Tukaram Puna, AIR 1951 Nagpur 8, has considered the right of a respondent in a second appeal to support a decree. After referring to the provisions contained in Rule 22 of Order 41 and Rule 1 of Order 42 it was held that the words "so far as may be" means that if any other provision prohibits the respondent from agitating any of the grounds he would not be able to support the decree on those grounds. 18. In order to find out whether a respondent in a second appeal is competent to maintain a cross objection and whether Rule 22 of Order 41 has been made applicable to second appeals by virtue of the provision in Rule 1 of Order 42 one has to see the grounds on which a cross objection can be taken in a first appeal. Under Rule 22 a cross objection can be filed only by a party who might have appealed but did not choose to file an appeal. The test to determine whether any objection can be taken by way of cross objection is to see whether the respondent could have appealed against the portion of the decree which is against him and whether he could have raised it in a memorandum of appeal. If he c....
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.... Karnataka High Court was called upon to consider the maintainability of a cross-objection in an appeal instituted under Section 260A of the Act. The High Court in Jyoti Kumari firstly took note of the legislative history preceding the amendments which were introduced in Order XLI Rule 22 of the Code and which had fallen for notice of the Supreme Court in Ravinder Kumar Sharma v. State of Assam. This becomes evident from a reading of paragraph 49 of the report which is reproduced hereunder: "49. Though Sri Shankar, learned counsel for the assessee, has placed reliance on the following decisions of the Supreme Court as also other High Courts to support the submission with regard to the maintainability of a cross-objection, even in a second appeal or in an appeal of the nature of section 260A of the Act, viz., Ravinder Kumar Sharma v. State of Assam reported in (1999) 7 SCC 435 relying particularly on paras. 19 to 24: "19. In connection with Order 41 rule 22 CPC after the 1976 amendment, we may first refer to the judgment of the Calcutta High Court in Nishambhu Jana v. Sova Guha [1984-85] 86 CWN 685. In that case, Mookerjee J. referred to the 54th Report of the Law ....
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....cided against him. What is meant is that he may support the decree by asserting that the matters decided against him should have been decided in his favour. The rule is being amended to make it clear. An Explanation is also being added to rule 22 empowering the respondent to file cross-objection in respect to a finding adverse to him notwithstanding that the ultimate decision is wholly or partly in his favour.' Mookerjee J. observed in Nishambhu Jana case (see p. 689) that the amended rule 22 of Order 41 of the Code has not brought any substantial change in the settled principles of law' (i.e. as accepted in Venkata Rao case) and clarified (page 691) that 'it would be incorrect to hold that the Explanation now inserted by Act 104 of 1976 has made it obligatory to file cross-objections even when the respondent supports the decree by stating that the findings against him in the court below in respect of any issue ought to have been in his favour'. 22. A similar view was expressed by U. N. Bachawat J. in Tej Kumar Jain v. Purshottam, AIR 1981 MP 55 that after the 1976 amendment, it was not obligatory to file cross-objection against a....
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....etermined on merits unless the statute confers right on the appellant and power on the court to do so. Section 39 of the Act confers right to file appeal, in so far as the orders passed under this Act are concerned, only against such of the orders as fall within one or other of the descriptions given in clauses (i) to (vi) of sub-section (1) of section 39. Parliament has taken care to specifically exclude any other appeal being filed, against any order passed under the Act but not covered by clauses (i) to (vi) abovesaid, by inserting the expression 'and from no others' in the text of sub-section (1). Clause (a) of section 41 extends applicability of all the provisions contained in the Code of Civil Procedure, 1908, to (i)all proceedings before the court under the Act, and (ii) to all the appeals, under the Act. However, the applicability of such of the provisions of the Code of Civil Procedure shall be excluded as may be inconsistent with the provisions of the Act and/or of rules made thereunder. A bare reading of these provisions shows that in all the appeals filed under section 39, the provisions of the Code of Civil Procedure, 1908, would be applicable. This would inclu....
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....nds which may be otherwise available to either answer against the assessee in appeal by the Tribunal. However, we are aware that the principles of natural justice even otherwise, would require that if a person who has obtained some benefit or relief is to be deprived of that benefit or relief he should have an opportunity to defend that possession. The minimum that is expected in law and procedure is that a person is given an opportunity before being deprived of any benefit or relief which a person had already obtained." 28. The Karnataka High Court also struck a discordant note on the issue of whether a cross-objection would be maintainable in a second appeal by holding thus: "79. While there are no direct or specific authorities of the Supreme Court on the question to hold that a cross-objection in terms of Order 41 rule 22 is tenable in a second appeal particularly, such a question having been not raised nor made an issue in the several authorities placed before us by the learned counsel and the other authorities, which we had occasion to refer to are only incidentally touching upon the aspect and in the wake of the provisions of Order 41, rule 22 as it occurs as par....
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....41 and the rules therein being made applicable to the procedure required to be followed in respect of an appeal preferred under Order 42 only to the extent it permits and not in its entirely. The preponderance of judicial opinion to the effect that the cross-objection in terms of Order 41, rule 22 of the Code of Civil Procedure cannot be inferred in all situations where even a first appeal is provided against an order of the original authority is also a legal principle which weighed heavily with us in coming to the conclusion that a cross-objection is not enabled in terms rule 2 of Order 42 of the Code of Civil Procedure." 29. Reverting then to the issue of the permissibility of a cross-objection being entertained while considering an appeal under Section 260A, the High Court held: "83. We have also for a good measure examined the possibility of a cross objection in terms of Order 41, rule 22 of the Code of Civil Procedure being entertained in an appeal under section 260A of the Act and on such examination and we notice our examination only indicates to the contrary, that when a cross-objection is not tenable even in an appeal under section 100 of the Code of Civil Proc....
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....at the decision of the High Court in an appeal under section 260A should be based only on the answer given to the questions of law formulated and examined and not based on any other considerations. When such are the restrictions imposed on an appeal under section 260A of the Act, it is rather difficult to accept the submission that a substantive right like a cross-objection which is nothing but a right of appeal in favour of the respondent can be inferred only because of the language of sub-section (7) of section 260A of the Act. 87. We are of the considered opinion that even if a cross-objection is possible or permitted and assuming on such premise also cross-objection is definitely not permissible under section 260A of the Act based only on the language of sub-section (7) of section 260A and in the absence on any express enabling provision creating a right of cross-objection. It is on an over all examination of all these aspects, we hold that a cross-objection is not permitted in an appeal under section 260A of the Act." 30. In our considered opinion, the question which stands posited for our consideration would have to be firstly and independently answered, bearing i....
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....on of law as is referred to in sub-section (1). (7) Save as otherwise provided in this Act, 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 this section." 31. It is pertinent to note that the Section 260A appeal remedy came to be inserted in the statute book by virtue of Finance (No. 2) Act, 1998 [Finance Act] with effect from 01 October 1998. Section 260A ordains that an appeal would lie to the High Court from every order passed by the Tribunal. In order to examine the principal objectives underlying the insertion of Section 260A in the Act, it would also be apposite to reproduce the Notes on Clauses that accompanied the Finance Bill and relevant parts whereof are extracted hereunder: "Clause 60 seeks to insert new sections 260A and 260B under sub-heading "Appeals to High Court" containing provisions regarding direct appeal to High Court. The proposed amendment seeks to provide that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial que....
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....appeals to the High Court shall, as far as may be applicable, also govern appeals instituted under the said provision. It is in the aforesaid context that Mr. Kantoor had sought to draw sustenance from Section 100, Order XLI Rule 22 and Order XLII Rule 1 of the Code. 34. However, and in our considered opinion, it would be inappropriate and perhaps unwise to answer the question which stands posed with reference to the various judgments which had come to be rendered solely in the context of the aforenoted statutory provisions existing in the Code. This since each statute may create an independent right of appeal and regulate the exercise of such a right subjecting it to such conditions and stipulations as may be considered appropriate. It is for this reason that Section 260A (7) desists from fully or completely adopting the provisions comprised in the Code. The Legislature has thus clearly been circumspect when stipulating that the provisions of the Code would be applicable only to the extent that Section 260A of the Act may envisage or sanction. 35. Recourse to the Code and the judgments rendered in the context of its provision may also not provide a conclusive answer to the i....
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.... (5) The appeal shall be heard on the question so formulated and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law, not formulated by it, if it is satisfied that the case involves such question.]" 38. Similarly, Order XLI Rule 22, post its amendment in 1976, appears in the statute book in the following form: "22. Upon hearing respondent may object to decree as if he had preferred separate appeal.-(1) Any respondent, though he may not have appealed from any part of the decree, may not only support the decree [but may also state that the finding against him in the Court below in respect of any issue ought to have been in his favour; and may also take any cross-objection] to the decree which he could have taken by way of appeal, provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal....
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..... The third common feature of the two remedies is the statute providing that they would both be guided by rules governing a first appeal insofar as the same may be applicable. Last but not least, is the prescription of the right of the respondents in both cases being statutorily confined to urging that no substantial question of law in fact arises. This restriction is distinct from the nature and the extent of the rights which are made available to parties at the stage of a first appeal. 42. Thus, while evaluating the correctness of the submissions which were addressed by Mr. Kantoor, we must, and at the outset, not lose sight of the primordial principles noticed above. An appeal, as has been repeatedly held, is not an inherent right or one which may be claimed irrespective of such a remedy having not been provisioned for. Decisions have consistently held that a right of appeal must be sourced or founded on a statutory prescription and which enables an aggrieved party to pursue its rights in accordance with the scheme and the procedural framework of the statute itself. In fact, and as was noticed in the preceding parts of this order, the Supreme Court itself while speaking on th....
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....ch order; or (d) an order passed by an Assessing Officer under sub-section (3) of Section 143 or Section 147 or Section 153-A or Section 153-C] in pursuance of the directions of the Dispute Resolution Panel or an order passed under Section 154 in respect of such order. (e) [* * *]; (e) an order passed by an Assessing Officer under sub-section (3) of Section 143 or Section 147 or Section 153-A or Section 153-C with the approval of the Principal Commissioner or Commissioner as referred to in sub-section (12) of Section 144-BA or an order passed under Section 154 or Section 155 in respect of such order. (f) an order passed by the prescribed authority under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (vi-a) of clause (23-C) of Section 10. (2) The Principal Commissioner or Commissioner may, if he objects to any order passed by a Deputy the Joint Commissioner (Appeals) or the Commissioner (Appeals) before the 1st day of October, 1998] or, as the case may be, a Principal Commissioner or the Joint Commissioner (Appeals) or the Commissioner (Appeals)] under Section 154 or Section 250, direct the Assessing Officer to appeal ....
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....ssessed income, subject to a maximum of ten thousand rupees: (d) where the subject-matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c), five hundred rupees. Provided that no fee shall be payable in the case of an appeal referred to in sub-section (2), or, sub-section (2-A) as it stood before its amendment by the Finance Act, 2016, or, a memorandum of cross-objections referred to in sub-section (4). (7) An application for stay of demand shall be accompanied by a fee of five hundred rupees. (8) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of appeal to the Appellate Tribunal under sub-section (2), so as to impart greater efficiency, transparency and accountability by- (a) optimising utilisation of the resources through economies of scale and functional specialisation; (b) introducing a team-based mechanism for appeal to the Appellate Tribunal, with dynamic jurisdiction. (9) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (8), by notification in the Official Gazette, direct t....
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....tial question of law. 47. It is the above aspect which appears to be of critical significance and representative of the legislative intent of narrowing down the scope of the appeal that may come to be instituted before us under Section 260A of the Act. If we were to countenance a right of preferring a cross-objection despite the aforenoted statutory prescription, it would result in not only widening the scope of the intended appeal proceedings but also amount to the Court by way of legal interpretation reading into Section 260A the existence of a substantive right which the statute otherwise forbears. Our conclusion with respect to the limited and narrow avenue of appeal which the Legislature sought to provide at the Section 260A stage is fortified by the indubitable fact that while the right to prefer cross-objections is statutorily recognised by Section 253 (4), Parliament chose not to confer such a right upon a respondent in an appeal referrable to the former. Legislative silence, as we had an occasion to observe in the preceding parts of this decision, may sometimes resonate louder than express words and which may be either ambiguous or capable of more than one interpretatio....
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....sought to be conferred upon a respondent to raise an issue which is neither connected nor concerned to the question of law on which the appeal comes to be admitted. While it may be open for a respondent to urge for our consideration a point in law or fact which came to be decided against it by the Tribunal while deciding the issue which gives rise to the question of law, it cannot be said to be an independent avenue to agitate an issue distinct from the principal question which stands posed for our consideration. Thus, even sub-section (6) cannot possibly be construed as being the receptacle of a right to prefer cross-objections in an appeal referable to Section 260A. 52. From a historical perspective, one may usefully advert to the regime of appeals which stood in place prior to the introduction of Section 260A. At that time, the appeals process followed the procedure of a statement of case and a substantial question of law being referred for the consideration of the High Court by the Tribunal by virtue of the provisions comprised in Section 256 (1). Various High Courts appear to have taken divergent views on the question of whether a non-applicant could claim a reference being....
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....aran (1980) 1 SCC 173 clarified the legal position in the following words: "11. The second question is whether the provision for payment of tax and dividend can be taken into account when computing the accumulated profits as on March 31, 1958. The Revenue contends that this question should not have been referred by the Appellate Tribunal to the High Court at the instance of the assessee because no reference application was made by the assessee. The only reference application, it is pointed out, before the Appellate Tribunal was the reference application filed by the Commissioner of Income Tax. We are of opinion that the Revenue is right. The objection was taken by the Revenue before the Appellate Tribunal when the statement of case was being prepared, but the Appellate Tribunal overruled the objection, relying on Girdhardas & Co. Ltd. v. CIT [(1957) 31 ITR 82 (Bom HC)] It does not appear that the Revenue contended before the High Court that the reference made to it by the Appellate Tribunal was incompetent insofar as the second question was concerned. Since, however, the objection pertains to the competence of the reference to the extent that it covers the second question ....
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....al under Section 254 has decided the appeal partly against one party and partly against the other. This may be so whether the appeal consists of a single subject-matter or there are more than one independent claims in the appeal. In the former, one party may be aggrieved by the grant of relief, even though partial, while the other may be aggrieved by the refusal to grant total relief. In the latter, relief may be granted if refused with reference to individual Items in dispute, and accordingly one party or the other will be aggrieved. In either case, the party who is aggrieved and who desires a reference to the High Court must file a reference application for that purpose. It is not open to him to make a reference application filed by the other party the basis of his claim that a question of law sought by him should be referred. The second category consists of cases where the order made by the Appellate Tribunal under Section 254 operates entirely in favour of one party, although in the course of making the order the Appellate Tribunal may have negatived some points of law raised by that party. Not being a party aggrieved by the result of the appeal, it is not open to that party to....
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....ht of a winning party to raise questions of law without applying for a reference are CIT v. Jiwaji Rao Sugar Co. Ltd. [(1969) 71 ITR 319 (MP HC)] followed in CIT v. Dr Fida Hussain G. Abbasi [(1969) 71 ITR 314 (MP HC)] and CIT v. K. Rathnam Nadar [(1969) 71 ITR 433 (Mad HC)]. Some attention has been given to the distinction between the two categories in CIT v. A.K. Das [(1970) 77 ITR 31, 44 (Cal HC)]. 15. In the present case, the question whether the provision of Rs 11,000 for tax and Rs 6900 for dividend can be taken into account when determining the accumulated profits as on March 31, 1958 is not related to the question whether accumulated profits can take in current profits. The two questions involve the grant of separate and distinct reliefs and the decision on one question does not affect the decision on the other. 16. Accordingly, we hold that the Appellate Tribunal was not competent to refer the second question, and the reference to that extent must be considered void. In the circumstances, it is not necessary to examine the second question on its merits. The judgment of the High Court must be set aside so far as it incorporates its opinion on the second qu....
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.... in the exercise of its inherent powers flowing from Section 151 of the Code. Though strictly speaking, that decision throws little light on the question which stands posited for our consideration, we for the purposes of completeness extract the following passages from that decision to underscore the observations appearing above: "6. After a plain reading of the provisions contained in sub-section (7) of section 260A of the Act, as noted hereinabove, there cannot be any doubt in our mind to hold that the provisions of the Code of Civil Procedure shall apply in the case of an appeal filed under section 260A of the Act. Order 41, rule 5 of the Code of Civil Procedure confers powers on the High Court as well as to the appellate court to stay proceedings under a decree or order. Therefore, ordinarily in view of sub-section (7) of section 260A of the Act, the provisions of Order 41, rule 5 of the Code of Civil Procedure would be readily applicable to an appeal filed under section 260A of the Act and the High Court is conferred with power to stay a proceeding for recovery of demand arising out of the assessment order pending disposal of the appeal under section 260A of the Act. ....
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.... to decide a question as to whether the direction given by the Assessing Officer in the assessment order to initiate a penalty proceeding pursuant to the order of assessment was liable to be set aside. Therefore, in our view, there cannot be any difficulty to hold that since the assessment order contains direction to initiate a penalty proceeding against the assessee, the provisions of Order 41, rule 5 of the Code of Civil Procedure can very well be applied to stay a penalty proceeding as well. Assuming the provisions of Order 41, rule 5 of the Code of Civil Procedure cannot be pressed into action, even then, we are of the view that in view of inherent power of the court under section 151 of the Code of Civil Procedure, the High Court being a "court" is entitled either to pass an order of injunction restraining the respondents from proceeding with the penalty proceeding or to stay further penalty proceedings pending disposal of the appeal. As noted herein earlier, in view of sub-section (7) of section 260A of the Act which clearly says that the provisions of the Code of Civil Procedure would be applicable also in an appeal filed under section 260A of the Act there is no doubt that ....
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....section 260A of the Act, the High Court is entitled to exercise inherent power under section 151 of the Code of Civil Procedure. That being the position, even if we hold that the provisions of Order 41, rule 5 of the Code of Civil Procedure would not be applicable in the facts and circumstances of the case in its strict term, then also the power to grant stay of the penalty proceeding pending disposal of this second appeal can be exercised by this court under section 151 of the Code of Civil Procedure. 8. There is another aspect of the matter. For the purpose of coming to the aforesaid conclusion, one more section of the Act would be relevant for appreciating the above submission. The section that immediately comes to our mind is section 275 of the Act. If we read sub-section (7) of section 260A of the Act and section 275 of the Act together, it would be clear that the High Court in an appeal filed under section 260A of the Act retains power to grant stay or injunction in respect of the penalty proceeding in question. From a plain reading of section 275 of the Act together with subsection (7) of section 260A, it would be clear that in computing the period of limitation for....
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....scern any recital which may indicate that the judgment itself was rendered on a second appeal. The nature of the appeal itself is described in the report as a 'Miscellaneous (First) Appeal'. The appeal itself arose out of the grant of temporary injunction in a suit filed by the respondent. By way of the cross-objections that were preferred therein, the respondents had sought the grant of further injunctions against other alleged infringements of their registered trademarks. 59. It was in that context that the High Court held as follows: "Shri A.P. Sen, who appeared for the appellant raised an objection that the cross-objection is not tenable because it is a cross-objection filed against art appellate order. The grant or refusal of a temporary injunction is expressly appealable under the Code of Civil Procedure. Under section 104 an appeal lies against an order granting or refusing a temporary injunction. Section 108 makes Chapter VII apply to all appeals, irrespective of whether they arise from decrees or orders. Order XLIII rule 2, clearly lays down that the rules of Order XLI shall apply, so far as they can be made applicable to appellate orders and that the intention....
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....d every part of each rule under Order 41 would apply to second appeals' clearly means that Order 41, Rule 22 is only an enabling provision for filing the cross-objection in Second Appeal, but the prohibition prescribed for Second Appeal under section 100 read with Order 42, Rule 2, C.P.C. must be adhered to." 61. Again, in Chandrawati, the issue came to be raised before that High Court in a second appeal. Dealing with the said question, the High Court held: "13. It is relevant here to state that Order 41 of the Code of Civil Procedure provides for procedure for hearing of appeals from original decrees. Section 96 of the Civil Procedure Code gives right of appeal from original decrees whereas section 100, Civil Procedure Code provides for second appeal from appellate decrees. As stated earlier, Order 41, Civil Procedure Code provides for procedure for hearings of appeals from original decrees, commonly described as first appeal and by virtue of Order 42, Rule 1, Civil Procedure Code, rules of Order 41 has been made applicable so far as may be to appeals from appellate decrees. Section 100, Civil Procedure Code provides for appeal from an appellate decree, i.e. second app....
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.... the appellant when the respondent questions the finding of the Court below in second appeal." 62. Thus, and from the extracts of the decisions noted above, the proposition which appears to emerge is of the Madhya Pradesh High Court while accepting that a cross-objection could be filed in a second appeal, their Lordships pertinently observed that the objection so filed would still have to meet the rigorous tests which accompany the institution of a second appeal and that being of those objections involving a substantial question of law. 63. The Madras High Court in V. Ramasamy v. M. Ranganathan 2016 SCC OnLine Mad 11343 was faced with the issue of the limitation that would apply to a cross-objection and the time from which that period would commence. It was while dealing with this principal question that the Madras High Court held as under: "21. Therefore, it is evident that very lying of the second appeal before the High Court would commence and take effect only when such appeal is entertained by the High Court after framing substantial question of law. In other words, issuing a notice to the respondent before admission of a second appeal in some cases, shall not be....
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.... was thus a case where the Tribunal had failed to return a finding in respect of an issue that was raised. Of equal significance is the fact that the failure on the part of the Tribunal to rule on that aspect was indelibly connected with the questions of law on which the appeal ultimately came to be admitted. In view of the above, and while disposing of the appeal, the High Court observed as follows: "15. The assessee's case is stronger for there is no finding by the Tribunal against it on the issue as to whether it is engaged in the business of carrying on banking. The Tribunal, as we noted earlier, did not think it necessary to decide this issue as it found that the assessee was entitled to succeed on another basis. There is in fact, therefore, nothing in the order of the Tribunal on this issue. In such a situation, there is no question of requiring the assessee to file cross-objections or an independent appeal. It often happens that certain issues are not dealt with by a Court or Tribunal although they may have been pressed especially where the Court holds in favour of a party on a different basis. This, as is apparent, is what has happened in the present case. The ....
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....der Section 35G of the Act, 1944 the provisions of the CPC relating to appeals to the High Court shall apply, therefore, by necessary consequence the provisions contained in Order 41 Rule 22 of the CPC would also apply because the said provision otherwise applies to appeals to the High Court under the CPC. The Hon'ble Supreme Court in Bhanu Kumar Shastri v. Mohanlal Su-khadia, (1971) 1 SCC 370 : AIR 1971 SC 2025, while dealing with the similar objection in an appeal against the order of High Court passed in an election petition has held thus in para 52: "52. Under Section 116C of the Representation of the People Act the procedure in an appeal is that subject to the provisions of the Act and of the Rules, if any, made thereunder every appeal shall be heard and determined by this Court as nearly as may be in accordance with the procedure applicable to the hearing and determination of an appeal from the final order passed by a High Court in the exercise of its original jurisdiction and of the provisions of the Code of Civil Procedure and the Rules of the Courts shall as far as possible apply in relation to such appeal. There are no rules of this Court which have any beari....
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....ht to prefer cross-objections having been incorporated in Section 260A despite that avenue having been accorded statutory recognition in Section 253 (4) of the Act. 69. In our considered opinion and bearing in mind the language of Section 260A (6)(b), the right of a respondent can at best stretch to advancing a contention in relation to any finding returned by the Tribunal adverse to that party and which has an indelible connect with the question of law on which the appeal may be admitted. 70. We thus find ourselves unable to countenance sub-sections (6) and (7) of Section 260A as conferring an independent right in a respondent to maintain or continue an apparent challenge in respect of a finding rendered by the Tribunal de hors or disconnected with the substantial question of law on which such an appeal may be entertained. 71. In summation, we would hold that absent a specific adoption of a right to prefer cross-objections and the same being statutorily acknowledged to be part of the appeal procedure laid out in Section 260A of the Act, a cross-objection would not be maintainable. Section 260A (6) is merely an enabling provision and which empowers a respondent to agitate ....