Smt. Jyothi Kumari v. Asstt. CIT (Inv.)

Case Laws Analysis
Followed on CICB-Chemicon (P) Ltd. v. CIT 2015 TaxPub(DT) 0666 (Karn-HC)

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The Tax PublishersITA Nos. 257 & 258 of 2001 & 277 of 2003 2012 TaxPub(DT) 2031 (Karn-HC) : (2012) 344 ITR 0060 INCOME TAX ACT, 1961 --Appeal (High Court)--Scope Cross-objection be filed whether can be filed by non-appellant--The three sets of Income Tax Appeals under section 260-A have their origin to a search that was conducted by the Income Tax Authorities on 18-3-1996 at the residence/business premises of the respondent in I.T.A.No-257/2001 and the appellant in I.T.A.No.277/2003. Two of the appeals, ITA.Nos.257/2001 and 258/2001 are by the revenue and respondents in these two appeals are couple. While in ITA No.257/2001 P is the respondent-assessee and the subject-matter relates to his undisclosed income assessed to tax by the assessing officer under the, provisions of section 158BC, but on his demise being now represented by his legal heir - wife Smt. J, wife herself is the respondent - assessee in ITA No. 258/2001 and the subject-matter of this appeal is the block assessment order passed in respect of this assessee for the block period 1-4-1985 to 18-3-1996 and in respect of her undisclosed income for this period, but the revenue passing an assessment order in the hands of this assessee more for the purpose of an alternative option as this assessee had claimed the income assessed to tax as her own income which had gone into contribution of acquiring an asset in respect of which contributions had been made by the couple, but the revenue having rejected this version of this assessee and having attributed the entire unexplained, undisclosed investment in the asset as the undisclosed income of the assessee's husband - P for the very block period. The respondent - Smt. J in the other appeal, viz. I.T.A.258/2001 is the wife of Sri. P. The search and the follow-up action having lead to the passing of the assessment order dated 26-5-1997 under the provisions of section 158BC, resulting in considerable tax liability on Sri. P, the principal assessee to an extent of Rs. 32,51,142 which is on the premise that the total undisclosed income, unearthed as a result of the search on 18-3-1996 was in a sum of Rs. 54,18,571 subjecting this undisclosed income to tax at 60% in terms of provisions of section 113. As a precautionary measure, the Revenue has also passed a protective assessment order in the hands of spouse of Sri. P, i.e., his wife as per a separate order dated 26-5-1997. In the hands of Smt. J, wife of Sri. P the protective assessment order in its turn, has resulted in an independent tax liability of a sum of Rs. 5,80,254 on the premise that there was an undisclosed income of Rs. 9,67,088 rounded off to Rs. 9,67,090 for the block period from 1-4-1985 to 18-3-1996, also in terms of section 158BC read with section 158BD. Both the persons who have suffered these assessment orders under Chapter XIV B are also regular assessees under the Act and while both of them are assessed to tax as individuals and the income offered to tax being an income earned and taxable under the head 'Profits and Gains of Business and Profession', to a certain extent under other sources also. Mr. P had offered his income from the business activity of Auto consultancy and Smt. J had offered, her income to tax in the returns that she had filed to be from the activity of tailoring and therefore, assessable to tax under the head 'Profits and Gains of Business and Profession.' The assessing officer had categorised the undisclosed income of Sri. P broadly under the heads 'Income Attributable to Money Lending Activities'. Income deemed to be undisclosed income of the assessee in view of the unexplained part of investment on the purchase of site No. 569/1, a site adjacent to the existing constructed property of this assessee at No. 568, 10th Cross, Buddha Marga, Siddartha Layout, Mysore and the unexplained part of expenditure incurred for constructing the property at No. 568, 10th Cross, Buddha Marga, Siddartha Layout, Mysore. The undisclosed income, attributable to all the above sources added up to a total of Rs. 54,18,571 in terms of the assessment order, was the subject-matter of appeal by Sri. P before the Tribunal under the provisions of section 253(1)(b). 14. Likewise, the assessment order passed in respect of the undisclosed income of Smt. J though was a protective measure by the revenue, on the premise of this assessee having undisclosed income attributable to the unexplained part of the investment on the property at No. 568, 10th Cross, Buddha Marga, Siddartha Layout, II Stage, Mysore. It is the very property in respect of which, her husband had also claimed to have made investment and the claim of the couple being that they had invested jointly for the construction of the house on this site and from out of their respective earnings. The block assessment order under section 158BC of the Act of this assessee also was for the block period 1-4-1985 to 18-3-1996 on the premise that the actual investments on the house property was not fully disclosed as also the actual income of the assessee from her own activities. The order in the hands of Smt. Jyothi Kumari was also appealed against and the Tribunal acting as the First Appellate Authority has allowed the appeals in full, in terms of the common order dated 4-4-2001 passed in respect of both these Appeals IT (SS) A.No. 118/B/97 and IT (SS) A.115/B/97. While agreeing with the claim of the assessees who had incidentally filed their returns in terms of the notices issued under the provisions of Chapter XIV-B and purporting to be under section 158BC disclosing NIL income for the block period and the assessing officer was directed to accept this NIL income returns of the assessees thereby amounting that the assessees did not have any undisclosed income and therefore, set aside the orders of the assessing authority passed in respect of both assessees. It is aggrieved by these common orders of the Tribunal allowing the appeals of the assessees the Revenue is in appeal seeking for setting aside the order of the Tribunal and for restoring the assessment order passed for the block period under the provisions of section 158BC. It is in this background that the appeals have been heard and arguments have been addressed in all three appeals. The assessee would invite attention to the provisions of sub-section (7) of section 260A to submit that the procedure as contemplated in CPC, particularly the provisions of Order 42 to a second Appeal and, in turn, that being linked to the provisions of Order 41 relating to First Appeal are all attracted in view of sub-section (7) of section 260 A of the Act and therefore, would urge that cross objection is enabled and tenable in view of sub-section (7) of section 260A even in an appeal under section 260A. Held: Assessee cannot raise cross-objection in a appeal filed by the appellant. Even at the first time, where the same was not taken before subordinate authorities, the cross-objection could not be raised before High Court under section 260A. Cross-objection as contemplaced in rule 22 of Order 41 of CPC are not tenable in an appeal under section 100 CPC even in terms of Order 42 of the Code. If the cross-objection is not even tenable in a second appeal under section 100 CPC, it is more so in an appeal under section 260A of the Act. 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. Insofar as the applicability or the attraction of the provisions of Order 41 Rule 22 in respect of the appeal under sub-section (7) of section 260A of the Act is concerned it may be examined as one leading to such possibility if it crosses three stages. (Para 45) Firstly, the provisions of Order 41, Rule 22 is applicable to a cross-objection enabled in an appeal against original decrees even as indicated in the very provision. It is a right given to a non-appealing respondent to defend a decree which the non-appealing respondent would have obtained before the Court of first instance and to the extent of merely defending in terms of the first part and for getting more relief in terms of second appeal of this provision. If first appeal in terms of section 96 of CPC is not the same as the second appeal in terms of section 100 of CPC. (Para 46) While the substantive provision for filing an appeal is the judgment and decree of the original court, question is as to whether under section 96 and the procedure governing the filing of such an appeal, is in terms of Order 41 of CPC. The substantive provision for filing a second appeal to the High Court can be compared to section 260A of the Act for the purpose of present examination. The procedure for disposal of the second appeal before the court is provided for in Order 42 and sub-rule (1) of Order 42 expressly says that the provisions of Order 41 of CPC shall be applicable insofar as may be, to appeals from appellate decrees. The Karnataka amendment to Order 42 of CPC has brought about the following changes in place of existing order that as in the Central Act page 373 of CPC. The words so far as may be the appeals from appellate decrees is of significance as the provision does not enable the applicability of Order 41 in its entirely to the procedure under Order 42 in respect of the second appeal. In fact, the procedure in terms of Order 42 can also be linked to the substantive provision of section 108 of CPC. (Para 47) It is under this provision, the enabling provisions of Order 42, in turn Order 41, to the extent they may be applicable are all invoked. It is by now well settled that an appeal is a creature of statute and is not either a vested right or a natural right nor can it be a right by implication. (Para 48) The question as to whether a cross-objection is tenable in a second appeal to the High Court was not a question, which was examined in judgment of the Supreme Court, but it is only explaining the scope of rule 22 of Order 41 and as to the precise scope of first part of rule 22 which enables a non-appealing respondent in an appeal against an appeal able decree to defend that part of the decree even by urging such other grounds which would have gone against the non-appealing respondent and not followed to hold that a cross-objection is tenable in a second appeal under section 100 CPC. (Para 50) None of the judgments/authorities cited by assessee have examined the question of tenability of cross-objection in an appeal under section 100 of CPC or in a like provision, but are all questions examined in the context of the scope of cross-objection under Order 41 rule 22 in an appeal against an original decree or a like situation. (Para 52) However, submission of revenue to the effect that in the absence of any express enabling provision a right, such as a right of appeal under Order 41 rule 22 though while has cross-objection which is nothing but a right of appeal itself, cannot be either by inference or by implication, read into the provisions of Order 42 or in turn under the provisions of sub-section (7) of section 260 A of the Act and it is in support this submission Sri. Seshachala has drawn our attention to the observations as pointed out in para 23 of the judgement of the Supreme Court in B. Subba Reddy's case cited (supra). The observation in this part summing up the principles that emerge above the applicability of Order 41 rule 22 in the context of section 41 or Arbitration Act, 1940 which is an appeal in the nature of a first appeal, as in second appeal under section 96 of CPC though may be limited on certain aspects as under the Arbitration Act is quite apt to the present situation and if one can draw sustenance to the observation contained in para-24, we have to inevitably conclude that cross-objection as contemplaced in rule 22 Order 41 of CPC are not tenable in an. appeal under section 100 CPC even in terms of Order 42 of the Code. (Para 53) If the cross-objection is not even tenable in a second appeal under section 100 CPC, it is more so in an appeal under section 260A of the Act. It is for this reason we reject the submission of Sri. Shankar, learned counsel for the assessee is rejected that the right of cross appeal or the right to defend an order of the Tribunal to the extent it is in favour of the respondents and which is appealed against before this Court in this appeal is available to the assessee on all grounds which may be otherwise available to either answer against the assessee in appeal by the Tribunal. However, 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. (Para 56) It is for this reason that thus court has examined the merits of the submission that the assessment order was barred by the provisions of section 158BE of the Act and Sri. Shankar, counsel for the assessee was permitted to make submission on that aspect of the matter on an examination of the factual position and the statutory provisions as pointed out m section 158BE of the Act, particularly, prescribing the period of one year and indicating the situations wherein the period of one year is enlarged. This court examined and answered such submissions also in the wake of the view expressed in the earlier part of this order. This court is of the clear opinion, that even on complying with the principles of natural justice and the prayer of the respondent-assessee to defend the order on the question of limitation also the submission of the respondent does not stand scrutiny in accepting the same as expressed earlier. (Para 57) It is, therefore, that the question of limitation cannot be pressed into service or it does not hold the defence set up on behalf of the assessee even to the limited extent of defending the order of the Tribunal to the extent, the relief was granted. (Para 58) The other part of the contention urged by the assessee is on the question of limitation apart from reliance placed on the provisions of Order 41 Rule 22 is by way of seeking to raise additional grounds in the appeal preferred by one of the two assessee viz., P in ITA.No.277/03 and for such purpose a memo is filed before us raising additional grounds in this appeal on the question of limitation, i.e., to contend that the assessing officer could not have passed a block assessment order in terms of section 158BC when a period of one year had elapsed from the date of initial search from 18-3-1996 and for passing the block assessment order dated 26-5-1997. Submission is that even if the assessee is not enabled to urge this as a ground in a possible cross-objection when the assessee could have filed in the appeals of the Revenue, but if the provisions were attracted by the first part of rule 22 of Order 41 as the assessee could have raised this ground by way of a defence to sustain the order of the Tribunal and even if that is not possible the assessee should now be permitted, even if it is to be held not possible, the assessee can definitely seek for raising additional grounds in his own appeal, which is again attracted against the order of the Tribunal though initially only on the question of difference of value and on the question of availability of a sum of Rs. 3.10,000 being the sale proceeds of a car which the assessee pressed earlier and which proceeds count in the investment which had been invested in the construction of building and such other questions. Limitation was not a question but in the light of the enabling proviso to sub-section (4) read with sub-section (6) of section 260A of the Act, Such additional ground/question should always be permitted to be raised and even the courts can also admit such questions and answer the questions and if such is the statutory provision the assessee should be permitted to raise this question. It is therefore, such additional grounds sought to be urged in the assessee's appeal, i.e., ITA. No. 277/2003, the question of limitation is sought to be agitated before this court to contend that the assessment order is bad in law. (Para 67) Court has bestowed attention to the prayer for raising additional grounds. While court is not inclined to accept the submission of the assessee that the statutory provisions particularly, sub-section (4) read write sub-section (6) of section 260A of the Act does enable this court to not only frame additional questions for examination, if such questions actually arise out the order of the Tribunal and if it is found that the Tribunal is again wrong or answering such questions and if the Tribunal has not expressly addressed any issues, it could be examined by this Court and a finding, or an answer recorded on the issue. (Para 68) The question relating to limitation being a mixed question of facts and law. A question of this nature, can be permitted to be raised only if it is found there is sufficient foundation laid for raising such a question at the earlier possible time and the matter is kept alive. (Para 69) The assessee in fact has urged limitation as a ground of appeal in its appeal before the Tribunal, such was not the stand taken before the original authority particularly, having regard to the tactual developments leading to the passing of the assessment order after the search began on 18-3-1396. (Para 70) With the Tribunal also not having shown its awareness in having adverted to the question of limitation, it could be presumed that the Tribunal has not accepted the contention urged or it is deemed to have been rejected and even if so, the question as to rejection of argument on the question of limitation could possibly constitute a question of law even in an appeal under section 260A. Court has some difficulty in accepting the submission that it constituted an issue before the lower authorities as an issue is framed only before the original authority. Though Sri. Shankar, learned counsel for the assessee has vehemently urged that for the purposes of examining an appeal under section 260A, having regard to the present set of facts that is against the order of the assessing authority, an appeal lies directly to the Tribunal which acts as the First Appellate Authority but when it comes to the question of a lis which is adversarial in nature, i.e., as though the parties are joining issues on some questions, it should be taken that the Tribunal is the original authority before which issues can arise and on such premise has also urged that the appeal under section 260A of the Act could be taken as first appeal and not a second appeal, the court not very impressed by these submissions for the reason that the very contention on the question of limitation is that the assessing authority could not have passed block assessment order in terms of section 158BC in view of the limitation provided under section 158BE. The objection to the question of limitation should be raised at the earliest, particularly when it is to be found, that on the peculiar facts and circumstances of the given case there cannot be a generalization of the question of limitation being applicable to all cases. It is no doubt true that the statute has prescribed the limitation in general but even here for the purposes of considering the supporting point of limitation it is inevitably linked to the date on which the cause of action arises which depends upon the facts and circumstances of each case and can be different in respect of each litigant in respect of income-tax matters, which is the respect of each assessee. If so, the question of limitation being not a pure question of law and being a mixed question of law and facts and the assessee having got an opportunity to plead this before the original authority as the assessee was quite aware that no block assessment order had been passed even as on 31-3-1997 and on the other hand the assessee having actively participated in the proceedings, if not for joining issue at least for seeking further time for filing its returns and if the assessee had not thought it proper to raise the question of limitation before the very assessing authority, it cannot be said that the assessee has got an opportunity to raise the question of limitation for the first time only before the Tribunal and that too only after the assessing authority passed the order. (Para 71) While it may be true, that when once the matter is heard and concluded and if it was within the period of limitation, there could not have been any possibility of the assessee so contending that the order is not possible because of the period of limitation in terms of section 158BE. In the present set of facts, the assessee being quite aware of the fact that as on 31-3-1997, no block assessment order had been passed, and even as contended there was no possibility of passing a block assessment order, the contention that it was not within the knowledge of the assessee as to when the assessing officer would pass the block assessment order is not tenable, an argument that can be accepted as it was to the knowledge of the assessee that the assessment order if at all is to be passed on and after 31-3-1997, it will be barred by section 158BE as is now sought to be contended. It is for this reason, court is required to examine the factual situation also to record a finding on this aspect assuming that it could have been made an issue before the Tribunal. (Para 72) In such circumstances, on both issues for urging the ground of limitation as a ground for dismissal of the appeals filed by the Revenue, court has to negative the contention and proceed to examine the merits of the order passed by the Tribunal. (Para 73) There are good number of judgments of the High Courts and even the Supreme Court indicating the scope of the provisions of Order 41, rule 22 and even with reference to the provision as it now prevails after the 1976 amendment to CPC. The scope of Order 41, rule 22 after the amendment is explained to be of two implications. The first part is to enable a non-appealing respondent to defend the order in appeal even by supporting the order by contending that the issues decided against the respondent should have been decided in favour of the respondent by the order under appeal even without filing a positive appeal or a cross appeal The second part is to enable a non-appealing respondent who could have filed an appeal to the extent of Original Court not having granted the relief sought for by the non-appealing person through an independent appeal to maintain a cross-objection which can achieve the purpose of maintaining an independent appeal and though such a party might have missed the bus and had not filed the appeal which is io be filed or to maintain such an appeal through the cross-objection in the appeal filed by either contestant to the original proceedings. (Para 75) While such is the scope of a cross objection filed under the provisions of Order 41 rule 22 which is expressly applicable to first appeals or in the sense which is Rule in Order 41 which is a procedural guidelines in respect of appeals from original decrees. Insofar as the provisions of Order 42 is concerned it is one relating to the procedure in appeals from the appellate decrees. (Para 76) The distinction between Order 41 and Order 42 is that while Order 41 regulates the procedure in appeals from original decrees, Order 42 regulates the procedure in appeals from the appellate decrees. Order 41 and Order 42 being in turn referable to substantive provisions of section 96 and also Order 42 and section 108 of CPC and the procedure under Order 42 being only as envisaged in Order 41 but only insofar as may be they can be made applicable to second appeals or the appeals from the appellate decree even on an elementary understanding of the two provisions, while one provides for first appeal and the other one being a second appeal, it is obvious that they are not one and the same i.e., a second appeal can never be equated on all its fours to a first appeal in the Code of Civil Procedure under section 100 appeal is not the same as section 96 appeal. If such fundamental principle is to be borne in mind then it becomes obvious that a procedural provision like Order 41, Rule 22, cannot provide for a right of appeal and a right of appeal can be creative of a statute and has expressly for filing a cross objection in a second appeal under section 100 of CPC, which is not so expressly provided in the same of filing a second appeal against appellate decrees, in the Code of Civil Procedure. Court say so, for the reason that until and unless the provision like Order 41, Rule 22 was expressly made applicable even in respect of section 100 appeal there is no way of reading that by way of implication. (Para 77) Though the case law on Order 41, rule 22 of CPC is quite considerable, court has not been able to come across direct authorities to hold a cross objection as contemplated under Order 41 rule 22 is tenable in an appeal from an appellate decree also. (Para 78) 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 part of the procedure regulating the filing of a regular first appeal, it cannon be by implication extended under order 42, to attribute a right of filing a cross-objection in a section 100 appeal also. (Para 79) Such a situation can arise only in an appeal against an original decree and not in an appeal against an appellate decree. A situation of this nature gets exhausted at the first appeal stage and need not be permitted/enabled again, in an appeal against an appellate decree. For this reason also we are inclined to take a view that a cross-objection is neither expressly enabled in an appeal under section 100 of CPC nor can it be inferred by the language of Rule 2 of order 42 which enables the provisions of Order 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 CPC 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 Code of Civil Procedure. (Para 82) One has also for a good measure examined the possibility of a cross-objection in terms of Order 41, Rule 22 of CPC being entertained in an appeal under section 280A of the Act and on such examination and on notice court examination only indicates to the contrary, that when a cross-objection is not tenable even in an appeal under section 100 of CPC, it is afortiari so in an appeal under section 260A of the Act. (Para 83) The provisions of sub-section (7) of section 260A of the Act on which counsel for the assessee has placed considerable reliance to contend that cross-objections are tenable even in an appeal under section 230A of the Act, also only enables the provisions of Code of Civil Procedure relating to the appeal to the High Court being made applicable only as far as may be and subject to the other provisions in this section or in the Act also. Sub-section (7) of section 260A of the Act figuring towards the end of the section 'Expressly providing for the procedure to be followed, it should be understood to be only in respect of the procedural aspects of Order 42 that is made applicable and even there to the extent it may be made applicable. While even in Order 42 not all provisions of Order 41 are made applicable, the scope of the provisions of Order 42 are being made applicable to an appeal under section 260A of the Act should necessarily be read as a provision in providing for creating substantive rights. A right of appeal under section 260A of the Act is governed by sub-sections (1) to (6). (Para 84) The scope of an appeal is that the order appealed against should involve a substantial question of law and of course such question having been decided erroneously by the Tribunal should warrant interference by the High Court in the appeal:- For the purpose of disposing of an appeal under section 260 A of the Act, the High Court being satisfied that the appeal which involve substantial question of law in the coarse of passing of the order by the Tribunal which is appealed against such question is to be formulated and at the time of hearing of the appeal, the hearing should be restricted only to such questions which have already been formulated and notified. While it is open to the respondent even to urge that the question does not even arise. It is obvious that the respondent can join issue on the merits to defend the order. The enabling provision of proviso to sub-section (4) does permit the High Court to formulate additional questions and not so formulated in the beginning but even it is found that such additional question arise or involved in the decision of the Tribunal appealed against. It is of some significance to investigate that 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. (Para 86) SUBSCRIBE FOR FULL CONTENT

The Tax PublishersITA Nos. 257 & 258 of 2001 & 277 of 2003
2012 TaxPub(DT) 2031 (Karn-HC) : (2012) 344 ITR 0060

INCOME TAX ACT, 1961

--Appeal (High Court)--Scope Cross-objection be filed whether can be filed by non-appellant--The three sets of Income Tax Appeals under section 260-A have their origin to a search that was conducted by the Income Tax Authorities on 18-3-1996 at the residence/business premises of the respondent in I.T.A.No-257/2001 and the appellant in I.T.A.No.277/2003. Two of the appeals, ITA.Nos.257/2001 and 258/2001 are by the revenue and respondents in these two appeals are couple. While in ITA No.257/2001 P is the respondent-assessee and the subject-matter relates to his undisclosed income assessed to tax by the assessing officer under the, provisions of section 158BC, but on his demise being now represented by his legal heir - wife Smt. J, wife herself is the respondent - assessee in ITA No. 258/2001 and the subject-matter of this appeal is the block assessment order passed in respect of this assessee for the block period 1-4-1985 to 18-3-1996 and in respect of her undisclosed income for this period, but the revenue passing an assessment order in the hands of this assessee more for the purpose of an alternative option as this assessee had claimed the income assessed to tax as her own income which had gone into contribution of acquiring an asset in respect of which contributions had been made by the couple, but the revenue having rejected this version of this assessee and having attributed the entire unexplained, undisclosed investment in the asset as the undisclosed income of the assessee's husband - P for the very block period. The respondent - Smt. J in the other appeal, viz. I.T.A.258/2001 is the wife of Sri. P. The search and the follow-up action having lead to the passing of the assessment order dated 26-5-1997 under the provisions of section 158BC, resulting in considerable tax liability on Sri. P, the principal assessee to an extent of Rs. 32,51,142 which is on the premise that the total undisclosed income, unearthed as a result of the search on 18-3-1996 was in a sum of Rs. 54,18,571 subjecting this undisclosed income to tax at 60% in terms of provisions of section 113. As a precautionary measure, the Revenue has also passed a protective assessment order in the hands of spouse of Sri. P, i.e., his wife as per a separate order dated 26-5-1997. In the hands of Smt. J, wife of Sri. P the protective assessment order in its turn, has resulted in an independent tax liability of a sum of Rs. 5,80,254 on the premise that there was an undisclosed income of Rs. 9,67,088 rounded off to Rs. 9,67,090 for the block period from 1-4-1985 to 18-3-1996, also in terms of section 158BC read with section 158BD. Both the persons who have suffered these assessment orders under Chapter XIV B are also regular assessees under the Act and while both of them are assessed to tax as individuals and the income offered to tax being an income earned and taxable under the head 'Profits and Gains of Business and Profession', to a certain extent under other sources also. Mr. P had offered his income from the business activity of Auto consultancy and Smt. J had offered, her income to tax in the returns that she had filed to be from the activity of tailoring and therefore, assessable to tax under the head 'Profits and Gains of Business and Profession.' The assessing officer had categorised the undisclosed income of Sri. P broadly under the heads 'Income Attributable to Money Lending Activities'. Income deemed to be undisclosed income of the assessee in view of the unexplained part of investment on the purchase of site No. 569/1, a site adjacent to the existing constructed property of this assessee at No. 568, 10th Cross, Buddha Marga, Siddartha Layout, Mysore and the unexplained part of expenditure incurred for constructing the property at No. 568, 10th Cross, Buddha Marga, Siddartha Layout, Mysore. The undisclosed income, attributable to all the above sources added up to a total of Rs. 54,18,571 in terms of the assessment order, was the subject-matter of appeal by Sri. P before the Tribunal under the provisions of section 253(1)(b). 14. Likewise, the assessment order passed in respect of the undisclosed income of Smt. J though was a protective measure by the revenue, on the premise of this assessee having undisclosed income attributable to the unexplained part of the investment on the property at No. 568, 10th Cross, Buddha Marga, Siddartha Layout, II Stage, Mysore. It is the very property in respect of which, her husband had also claimed to have made investment and the claim of the couple being that they had invested jointly for the construction of the house on this site and from out of their respective earnings. The block assessment order under section 158BC of the Act of this assessee also was for the block period 1-4-1985 to 18-3-1996 on the premise that the actual investments on the house property was not fully disclosed as also the actual income of the assessee from her own activities. The order in the hands of Smt. Jyothi Kumari was also appealed against and the Tribunal acting as the First Appellate Authority has allowed the appeals in full, in terms of the common order dated 4-4-2001 passed in respect of both these Appeals IT (SS) A.No. 118/B/97 and IT (SS) A.115/B/97. While agreeing with the claim of the assessees who had incidentally filed their returns in terms of the notices issued under the provisions of Chapter XIV-B and purporting to be under section 158BC disclosing NIL income for the block period and the assessing officer was directed to accept this NIL income returns of the assessees thereby amounting that the assessees did not have any undisclosed income and therefore, set aside the orders of the assessing authority passed in respect of both assessees. It is aggrieved by these common orders of the Tribunal allowing the appeals of the assessees the Revenue is in appeal seeking for setting aside the order of the Tribunal and for restoring the assessment order passed for the block period under the provisions of section 158BC. It is in this background that the appeals have been heard and arguments have been addressed in all three appeals. The assessee would invite attention to the provisions of sub-section (7) of section 260A to submit that the procedure as contemplated in CPC, particularly the provisions of Order 42 to a second Appeal and, in turn, that being linked to the provisions of Order 41 relating to First Appeal are all attracted in view of sub-section (7) of section 260 A of the Act and therefore, would urge that cross objection is enabled and tenable in view of sub-section (7) of section 260A even in an appeal under section 260A. Held: Assessee cannot raise cross-objection in a appeal filed by the appellant. Even at the first time, where the same was not taken before subordinate authorities, the cross-objection could not be raised before High Court under section 260A. Cross-objection as contemplaced in rule 22 of Order 41 of CPC are not tenable in an appeal under section 100 CPC even in terms of Order 42 of the Code. If the cross-objection is not even tenable in a second appeal under section 100 CPC, it is more so in an appeal under section 260A of the Act. 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.

Insofar as the applicability or the attraction of the provisions of Order 41 Rule 22 in respect of the appeal under sub-section (7) of section 260A of the Act is concerned it may be examined as one leading to such possibility if it crosses three stages. (Para 45) Firstly, the provisions of Order 41, Rule 22 is applicable to a cross-objection enabled in an appeal against original decrees even as indicated in the very provision. It is a right given to a non-appealing respondent to defend a decree which the non-appealing respondent would have obtained before the Court of first instance and to the extent of merely defending in terms of the first part and for getting more relief in terms of second appeal of this provision. If first appeal in terms of section 96 of CPC is not the same as the second appeal in terms of section 100 of CPC. (Para 46) While the substantive provision for filing an appeal is the judgment and decree of the original court, question is as to whether under section 96 and the procedure governing the filing of such an appeal, is in terms of Order 41 of CPC. The substantive provision for filing a second appeal to the High Court can be compared to section 260A of the Act for the purpose of present examination. The procedure for disposal of the second appeal before the court is provided for in Order 42 and sub-rule (1) of Order 42 expressly says that the provisions of Order 41 of CPC shall be applicable insofar as may be, to appeals from appellate decrees. The Karnataka amendment to Order 42 of CPC has brought about the following changes in place of existing order that as in the Central Act page 373 of CPC. The words so far as may be the appeals from appellate decrees is of significance as the provision does not enable the applicability of Order 41 in its entirely to the procedure under Order 42 in respect of the second appeal. In fact, the procedure in terms of Order 42 can also be linked to the substantive provision of section 108 of CPC. (Para 47) It is under this provision, the enabling provisions of Order 42, in turn Order 41, to the extent they may be applicable are all invoked. It is by now well settled that an appeal is a creature of statute and is not either a vested right or a natural right nor can it be a right by implication. (Para 48) The question as to whether a cross-objection is tenable in a second appeal to the High Court was not a question, which was examined in judgment of the Supreme Court, but it is only explaining the scope of rule 22 of Order 41 and as to the precise scope of first part of rule 22 which enables a non-appealing respondent in an appeal against an appeal able decree to defend that part of the decree even by urging such other grounds which would have gone against the non-appealing respondent and not followed to hold that a cross-objection is tenable in a second appeal under section 100 CPC. (Para 50) None of the judgments/authorities cited by assessee have examined the question of tenability of cross-objection in an appeal under section 100 of CPC or in a like provision, but are all questions examined in the context of the scope of cross-objection under Order 41 rule 22 in an appeal against an original decree or a like situation. (Para 52) However, submission of revenue to the effect that in the absence of any express enabling provision a right, such as a right of appeal under Order 41 rule 22 though while has cross-objection which is nothing but a right of appeal itself, cannot be either by inference or by implication, read into the provisions of Order 42 or in turn under the provisions of sub-section (7) of section 260 A of the Act and it is in support this submission Sri. Seshachala has drawn our attention to the observations as pointed out in para 23 of the judgement of the Supreme Court in B. Subba Reddy's case cited (supra). The observation in this part summing up the principles that emerge above the applicability of Order 41 rule 22 in the context of section 41 or Arbitration Act, 1940 which is an appeal in the nature of a first appeal, as in second appeal under section 96 of CPC though may be limited on certain aspects as under the Arbitration Act is quite apt to the present situation and if one can draw sustenance to the observation contained in para-24, we have to inevitably conclude that cross-objection as contemplaced in rule 22 Order 41 of CPC are not tenable in an. appeal under section 100 CPC even in terms of Order 42 of the Code. (Para 53) If the cross-objection is not even tenable in a second appeal under section 100 CPC, it is more so in an appeal under section 260A of the Act. It is for this reason we reject the submission of Sri. Shankar, learned counsel for the assessee is rejected that the right of cross appeal or the right to defend an order of the Tribunal to the extent it is in favour of the respondents and which is appealed against before this Court in this appeal is available to the assessee on all grounds which may be otherwise available to either answer against the assessee in appeal by the Tribunal. However, 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. (Para 56) It is for this reason that thus court has examined the merits of the submission that the assessment order was barred by the provisions of section 158BE of the Act and Sri. Shankar, counsel for the assessee was permitted to make submission on that aspect of the matter on an examination of the factual position and the statutory provisions as pointed out m section 158BE of the Act, particularly, prescribing the period of one year and indicating the situations wherein the period of one year is enlarged. This court examined and answered such submissions also in the wake of the view expressed in the earlier part of this order. This court is of the clear opinion, that even on complying with the principles of natural justice and the prayer of the respondent-assessee to defend the order on the question of limitation also the submission of the respondent does not stand scrutiny in accepting the same as expressed earlier. (Para 57) It is, therefore, that the question of limitation cannot be pressed into service or it does not hold the defence set up on behalf of the assessee even to the limited extent of defending the order of the Tribunal to the extent, the relief was granted. (Para 58) The other part of the contention urged by the assessee is on the question of limitation apart from reliance placed on the provisions of Order 41 Rule 22 is by way of seeking to raise additional grounds in the appeal preferred by one of the two assessee viz., P in ITA.No.277/03 and for such purpose a memo is filed before us raising additional grounds in this appeal on the question of limitation, i.e., to contend that the assessing officer could not have passed a block assessment order in terms of section 158BC when a period of one year had elapsed from the date of initial search from 18-3-1996 and for passing the block assessment order dated 26-5-1997. Submission is that even if the assessee is not enabled to urge this as a ground in a possible cross-objection when the assessee could have filed in the appeals of the Revenue, but if the provisions were attracted by the first part of rule 22 of Order 41 as the assessee could have raised this ground by way of a defence to sustain the order of the Tribunal and even if that is not possible the assessee should now be permitted, even if it is to be held not possible, the assessee can definitely seek for raising additional grounds in his own appeal, which is again attracted against the order of the Tribunal though initially only on the question of difference of value and on the question of availability of a sum of Rs. 3.10,000 being the sale proceeds of a car which the assessee pressed earlier and which proceeds count in the investment which had been invested in the construction of building and such other questions. Limitation was not a question but in the light of the enabling proviso to sub-section (4) read with sub-section (6) of section 260A of the Act, Such additional ground/question should always be permitted to be raised and even the courts can also admit such questions and answer the questions and if such is the statutory provision the assessee should be permitted to raise this question. It is therefore, such additional grounds sought to be urged in the assessee's appeal, i.e., ITA. No. 277/2003, the question of limitation is sought to be agitated before this court to contend that the assessment order is bad in law. (Para 67) Court has bestowed attention to the prayer for raising additional grounds. While court is not inclined to accept the submission of the assessee that the statutory provisions particularly, sub-section (4) read write sub-section (6) of section 260A of the Act does enable this court to not only frame additional questions for examination, if such questions actually arise out the order of the Tribunal and if it is found that the Tribunal is again wrong or answering such questions and if the Tribunal has not expressly addressed any issues, it could be examined by this Court and a finding, or an answer recorded on the issue. (Para 68) The question relating to limitation being a mixed question of facts and law. A question of this nature, can be permitted to be raised only if it is found there is sufficient foundation laid for raising such a question at the earlier possible time and the matter is kept alive. (Para 69) The assessee in fact has urged limitation as a ground of appeal in its appeal before the Tribunal, such was not the stand taken before the original authority particularly, having regard to the tactual developments leading to the passing of the assessment order after the search began on 18-3-1396. (Para 70) With the Tribunal also not having shown its awareness in having adverted to the question of limitation, it could be presumed that the Tribunal has not accepted the contention urged or it is deemed to have been rejected and even if so, the question as to rejection of argument on the question of limitation could possibly constitute a question of law even in an appeal under section 260A. Court has some difficulty in accepting the submission that it constituted an issue before the lower authorities as an issue is framed only before the original authority. Though Sri. Shankar, learned counsel for the assessee has vehemently urged that for the purposes of examining an appeal under section 260A, having regard to the present set of facts that is against the order of the assessing authority, an appeal lies directly to the Tribunal which acts as the First Appellate Authority but when it comes to the question of a lis which is adversarial in nature, i.e., as though the parties are joining issues on some questions, it should be taken that the Tribunal is the original authority before which issues can arise and on such premise has also urged that the appeal under section 260A of the Act could be taken as first appeal and not a second appeal, the court not very impressed by these submissions for the reason that the very contention on the question of limitation is that the assessing authority could not have passed block assessment order in terms of section 158BC in view of the limitation provided under section 158BE. The objection to the question of limitation should be raised at the earliest, particularly when it is to be found, that on the peculiar facts and circumstances of the given case there cannot be a generalization of the question of limitation being applicable to all cases. It is no doubt true that the statute has prescribed the limitation in general but even here for the purposes of considering the supporting point of limitation it is inevitably linked to the date on which the cause of action arises which depends upon the facts and circumstances of each case and can be different in respect of each litigant in respect of income-tax matters, which is the respect of each assessee. If so, the question of limitation being not a pure question of law and being a mixed question of law and facts and the assessee having got an opportunity to plead this before the original authority as the assessee was quite aware that no block assessment order had been passed even as on 31-3-1997 and on the other hand the assessee having actively participated in the proceedings, if not for joining issue at least for seeking further time for filing its returns and if the assessee had not thought it proper to raise the question of limitation before the very assessing authority, it cannot be said that the assessee has got an opportunity to raise the question of limitation for the first time only before the Tribunal and that too only after the assessing authority passed the order. (Para 71) While it may be true, that when once the matter is heard and concluded and if it was within the period of limitation, there could not have been any possibility of the assessee so contending that the order is not possible because of the period of limitation in terms of section 158BE. In the present set of facts, the assessee being quite aware of the fact that as on 31-3-1997, no block assessment order had been passed, and even as contended there was no possibility of passing a block assessment order, the contention that it was not within the knowledge of the assessee as to when the assessing officer would pass the block assessment order is not tenable, an argument that can be accepted as it was to the knowledge of the assessee that the assessment order if at all is to be passed on and after 31-3-1997, it will be barred by section 158BE as is now sought to be contended. It is for this reason, court is required to examine the factual situation also to record a finding on this aspect assuming that it could have been made an issue before the Tribunal. (Para 72) In such circumstances, on both issues for urging the ground of limitation as a ground for dismissal of the appeals filed by the Revenue, court has to negative the contention and proceed to examine the merits of the order passed by the Tribunal. (Para 73) There are good number of judgments of the High Courts and even the Supreme Court indicating the scope of the provisions of Order 41, rule 22 and even with reference to the provision as it now prevails after the 1976 amendment to CPC. The scope of Order 41, rule 22 after the amendment is explained to be of two implications. The first part is to enable a non-appealing respondent to defend the order in appeal even by supporting the order by contending that the issues decided against the respondent should have been decided in favour of the respondent by the order under appeal even without filing a positive appeal or a cross appeal The second part is to enable a non-appealing respondent who could have filed an appeal to the extent of Original Court not having granted the relief sought for by the non-appealing person through an independent appeal to maintain a cross-objection which can achieve the purpose of maintaining an independent appeal and though such a party might have missed the bus and had not filed the appeal which is io be filed or to maintain such an appeal through the cross-objection in the appeal filed by either contestant to the original proceedings. (Para 75) While such is the scope of a cross objection filed under the provisions of Order 41 rule 22 which is expressly applicable to first appeals or in the sense which is Rule in Order 41 which is a procedural guidelines in respect of appeals from original decrees. Insofar as the provisions of Order 42 is concerned it is one relating to the procedure in appeals from the appellate decrees. (Para 76) The distinction between Order 41 and Order 42 is that while Order 41 regulates the procedure in appeals from original decrees, Order 42 regulates the procedure in appeals from the appellate decrees. Order 41 and Order 42 being in turn referable to substantive provisions of section 96 and also Order 42 and section 108 of CPC and the procedure under Order 42 being only as envisaged in Order 41 but only insofar as may be they can be made applicable to second appeals or the appeals from the appellate decree even on an elementary understanding of the two provisions, while one provides for first appeal and the other one being a second appeal, it is obvious that they are not one and the same i.e., a second appeal can never be equated on all its fours to a first appeal in the Code of Civil Procedure under section 100 appeal is not the same as section 96 appeal. If such fundamental principle is to be borne in mind then it becomes obvious that a procedural provision like Order 41, Rule 22, cannot provide for a right of appeal and a right of appeal can be creative of a statute and has expressly for filing a cross objection in a second appeal under section 100 of CPC, which is not so expressly provided in the same of filing a second appeal against appellate decrees, in the Code of Civil Procedure. Court say so, for the reason that until and unless the provision like Order 41, Rule 22 was expressly made applicable even in respect of section 100 appeal there is no way of reading that by way of implication. (Para 77) Though the case law on Order 41, rule 22 of CPC is quite considerable, court has not been able to come across direct authorities to hold a cross objection as contemplated under Order 41 rule 22 is tenable in an appeal from an appellate decree also. (Para 78) 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 part of the procedure regulating the filing of a regular first appeal, it cannon be by implication extended under order 42, to attribute a right of filing a cross-objection in a section 100 appeal also. (Para 79) Such a situation can arise only in an appeal against an original decree and not in an appeal against an appellate decree. A situation of this nature gets exhausted at the first appeal stage and need not be permitted/enabled again, in an appeal against an appellate decree. For this reason also we are inclined to take a view that a cross-objection is neither expressly enabled in an appeal under section 100 of CPC nor can it be inferred by the language of Rule 2 of order 42 which enables the provisions of Order 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 CPC 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 Code of Civil Procedure. (Para 82) One has also for a good measure examined the possibility of a cross-objection in terms of Order 41, Rule 22 of CPC being entertained in an appeal under section 280A of the Act and on such examination and on notice court examination only indicates to the contrary, that when a cross-objection is not tenable even in an appeal under section 100 of CPC, it is afortiari so in an appeal under section 260A of the Act. (Para 83) The provisions of sub-section (7) of section 260A of the Act on which counsel for the assessee has placed considerable reliance to contend that cross-objections are tenable even in an appeal under section 230A of the Act, also only enables the provisions of Code of Civil Procedure relating to the appeal to the High Court being made applicable only as far as may be and subject to the other provisions in this section or in the Act also. Sub-section (7) of section 260A of the Act figuring towards the end of the section 'Expressly providing for the procedure to be followed, it should be understood to be only in respect of the procedural aspects of Order 42 that is made applicable and even there to the extent it may be made applicable. While even in Order 42 not all provisions of Order 41 are made applicable, the scope of the provisions of Order 42 are being made applicable to an appeal under section 260A of the Act should necessarily be read as a provision in providing for creating substantive rights. A right of appeal under section 260A of the Act is governed by sub-sections (1) to (6). (Para 84) The scope of an appeal is that the order appealed against should involve a substantial question of law and of course such question having been decided erroneously by the Tribunal should warrant interference by the High Court in the appeal:- For the purpose of disposing of an appeal under section 260 A of the Act, the High Court being satisfied that the appeal which involve substantial question of law in the coarse of passing of the order by the Tribunal which is appealed against such question is to be formulated and at the time of hearing of the appeal, the hearing should be restricted only to such questions which have already been formulated and notified. While it is open to the respondent even to urge that the question does not even arise. It is obvious that the respondent can join issue on the merits to defend the order. The enabling provision of proviso to sub-section (4) does permit the High Court to formulate additional questions and not so formulated in the beginning but even it is found that such additional question arise or involved in the decision of the Tribunal appealed against. It is of some significance to investigate that 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. (Para 86)