Section 246A of the Income Tax Act
Income-tax Act, 2025: s.357
Section 246A of the Income-tax Act, 1961 corresponds to section 357 (Appealable orders before Commissioner (Appeals)) of the Income-tax Act, 2025.
Read section 357 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 246A is CIT v. Premkumar Arjundas Luthra (HUF) (297 CTR 614), cited in 659 of the 1,308 judgments on BharatTax that turn on this section.
Leading authorities on Section 246A
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 (Appeals) cannot dismiss an appeal for non-prosecution; the law does not empower them to do so. The appeal must be decided on merits and in writing, stating points for determination, decision, and reasons.
The Supreme Court considered the delay in filing an appeal and the appellant's justification for it. The court noted that the appellant's registered address was used for communication and that the postal authorities returned mail. The court referenced its earlier decision in 'Meda Raja Kishor Raghuramy Reddy Vs ACIT' when considering the appellant's case.
The Commissioner (Appeals) has the power to enhance an assessment under section 251(2) of the Income Tax Act, 1961, provided the assessee has been given a reasonable opportunity of being heard.
The Commissioner (Appeals) must pass a speaking order on merits, considering the grounds raised in the assessee's appeal. They cannot dispose of an appeal by simply stating the Assessing Officer's order is self-speaking and requires no interference.
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.
The provisions of a Double Taxation Avoidance Agreement (DTAA) would prevail over the domestic law rate of Dividend Distribution Tax (DDT) under Section 115-O.
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.
