When CIT (A) reduced Quantum of Disallowance u/s 14A and assessee accepted it, Filing of Cross-Objection after 4 years is not proper: Delhi HC [Read Judgment]

The Delhi High Court recently said that filing of cross-objection after 4 years is not proper when assessee accepted the disallowance under section 14A of the Income Tax Act made by the CIT (A) years before.

The bench comprising justice S. Ravindra Bhat & justice A. K. Chawla was hearing an appeal filed by assessee, who was subjected to disallowance under Section 14A of the Act and years before CIT (A), who granted limited relief by reducing the quantum of disallowance.

During the pendency of appeals on this issues, assessee filed a cross objection regarding the same and submitted that exempt income for which disallowance was ordered under Section 14A of the Act was by way of investment in subsidiary for business purposes and not for investment purposes.

The High Court noted that the assessee did not prefer either an appeal or a cross-objection within the time stipulated and filed belated cross-objections after four years. In the opinion of the Court, this meant that the appellants were seeking to bring up the old issues for which they had accepted the finality as regards their tax liability.

“What is not in dispute in the present case is that after the CIT(A) granted limited relief and reduced the quantum of the disallowance, the assessee was satisfied. It did not prefer either an appeal or a cross-objection within the time stipulated in this regard. This, in the opinion of the Court, meant that the issue of applicability of Section 14A attained finality. The appellant / assessee, in the light of CIT v. Holcim India (P) Ltd. (supra), however, woke up and chose to approach the ITAT, the appeals pending before it by the Revenue. The appeals were preferred in 2011, by the Revenue. The CIT(A) had made the order on 27.10.2010. In the circumstances, the belated cross-objections – by over four years, in the opinion of the Court, meant that the appellants were seeking to rake up stale issues for which they had accepted the finality as regards their tax liability,” the bench said.