Section 246A of the Income Tax Act

The Commissioner of Income-tax (Appeals) cannot dismiss an appeal for non-prosecution or default in appearance. Under Section 250(6) of the Income-tax Act, the CIT(A) must decide the appeal on its merits, even in an ex parte proceeding.

Where a reasonable cause for delay in filing an appeal exists, the period of delay may not be a relevant factor for condonation. The court has condoned even substantial delays, such as nearly 21 years, based on the presence of a reasonable cause.

The principle of 'sufficient cause' for condonation of delay in filing appeals requires a liberal interpretation to ensure substantial justice, but delay will not be condoned if sufficient cause is not satisfactorily explained by the appellant.

The Commissioner of Income-tax (Appeals) cannot dismiss an appeal solely on the grounds of delay without addressing its merits. The appellant must be given an opportunity to explain the reasons for the delay before the appeal is decided.

Condonation of delay in filing an appeal is determined by the sufficiency of the cause shown, not merely the length of the delay, as the length of delay can never be the sole deciding factor.

The tax authorities can look beyond the legal form of a transaction and disregard the corporate entity if it is used for tax evasion or to create a smoke screen. The assessee bears the burden of proving the identity, creditworthiness, and genuineness of transactions, and the true nature of a transaction is determined based on surrounding circumstances and human probabilities, not requiring proof beyond reasonable doubt.

Interest paid on borrowed funds is not allowable as a deduction under Section 36(1)(iii) of the Income-tax Act to the extent such funds are diverted to provide interest-free advances for non-business purposes, such as to sister concerns or promoter companies.

When an assessee has mixed funds from both own sources and borrowings in a cash credit account, the debit balance is presumed to have been met from the company's own funds. This principle is applied to assess the allowability of interest deduction under Section 36(1)(iii) for capital borrowed for business purposes.