Cross-objections are not maintainable under Section 260A of the Income Tax Act due to the absence of explicit statutory provision allowing such a right.

ORDER :

YASHWANT VARMA, J.

1. In terms of this order, we propose to dispose of the preliminary objection which was raised by the appellants with respect to the maintainability of the cross-objections 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 respect before the Ld. CIT(A)?

D. Whether, the Ld. ITAT has erred in law on the facts of the case in not sustaining the addition made by the Assessing Officer of Rs.72,18,132/- on the issue of Deemed Dividend even when the provisions of the Section 2(22)(e) of the Act are clearly applicable?"

3. After hearing learned counsels for respective sides, we had by our order of 18 September 2024 admitted these appeals on the following question of law:

“A. Whether the Tribunal has erred in not upholding the action of the Assessing Officer in disallowing INR 1,08,34,15,088/- under Section 40A(3) and in holding that no addition was made by the AO under Section 40A(3) whereas the AO had categorically mentioned this addition in the order and had also initiated penalty proceedings under Section 271(l)(c), though no separate addition was made considering the disallowance of higher amount on account of bogus purchases?”

4. The appeals themselves arise out of a search and seizure operation undertaken on 17 September 2010 in terms of Section 132(1) of the Income Tax Act, 1961 , [Act], in the case of the Nagar Dairy Group. In the course of that search, the appellants are stated to have also seized documents and material from the premises of M/s AIMS Promoters Pvt. Ltd. relating to the respondent-assessee. It is this which led to the initiation of proceedings referable to Section 153C of the Act. By the time the matter reached the Tribunal, we find that insofar as the challenge of the assessee to the invocation of Section 153C was concerned, the same came to be negated with the Tribunal noting as follows:

“4. The assessee has raised the issue of satisfaction and also assessment of undisclosed income not based on seized document. With regard to the recording of satisfaction note, the matter stands adjudicated in the case of the assessee in CO Nos. 26, 27 & 28/Del/2016 by relying on the Judgment of Hon‟ble Apex Court in the case of Super Malls Pvt. Ltd. in CA No. 2006 to 2007 of 2020 , by following the very same ratio since the satisfaction recorded by the A