BHANWAR LAL JAIN,JAIPUR vs. ITO WARD1(1), JAIPUR, JAIPUR

These two appeals by the Assessee are directed against the separate orders of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the learned CIT(A)”] dated 12.11.2025 for A.Y. 2019-20 and dated 28.10.2025 for A.Y. 2020-21, arising out of the assessment orders dated 26.03.2024 and 19.03.2025 respectively, passed by the Income Tax Officer, Ward 1(1), Jaipur (hereinafter referred to as “the AO”) under section 147 read with section 144 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). As

There is a delay of 94 days in filing the appeal in ITA No. 1236/JPR/2026 and of 125 days in ITA No. 1237/JPR/2026. The Assessee has filed separate applications for condonation of delay, each supported by an affidavit. It is stated that the Assessee is a senior citizen aged about 69 years, who did not operate his email ID and was unaware of the hearing notices issued by the learned CIT(A) and of the ex parte orders passed by the learned CIT(A). It is further stated that the orders came to light when the counsel of the Assessee checked the income tax portal in the routine course, whereafter the appeals were prepared and filed on 05.05.2026, and that the delay was bona fide and beyond the control of the Assessee. Having regard to the age of the Assessee, and the fact that both appeals were decided ex parte by the learned CIT(A), we do not find any deliberate inaction or mala fide intent on the part of the Assessee. When substantial justice and technical considerations are pitted against each other, the former deserves to be preferred. Accordingly, the delay in both appeals is condoned and the appeals are admitted for hearing.

The grounds of appeal raised by the Assessee before us in the memorandum of appeal in Form No. 36 in ITA No. 1236/JPR/2026 read as under:

Briefly stated, the facts of the case are that a search and seizure action was carried out in the case of the Hyatt Group on 01.06.2022, in which the residence of Shri Ram Ratan Dhanopia (also referred to as Shri Shriram Dhanopia in the assessment orders) was covered. On the basis of WhatsApp chats found in the iPhone of Shri Dhanopia, information was received that the Assessee had advanced cash loans to Shri Dhanopia and had received interest on them in cash. For A.Y. 2020-21, the information was that such loans aggregated to Rs 52,00,000 with cash interest of Rs 1,23,700 over various years. On this information, the AO reopened the assessments for both years. The relevant details are summarised below:

For A.Y. 2019-20, the notice under section 148 of the Act was received back with the postal remark “LEFT” and no return was filed in response. During the assessment proceedings, the Assessee sought copies of the material relied upon, which were supplied on 22.02.2024. In the reply dated 27.02.2024, the Assessee denied having advanced any cash loan to Shri Dhanopia and stated that, being a broker arranging grey fabric for exports, the slip could relate to a demand for interest on delayed payment for grey supply. The AO rejected the explanation as unsupported and made the addition of Rs 5,12,000. For A.Y. 2020-21, the Assessee had filed the return on 10.01.2021 declaring income of Rs 4,82,310. The Assessee did not respond to the notices under section 142(1) of the Act, the summons under section 131 of the Act or the show cause notice dated 18.02.2025, and the AO completed the assessment by making the additions shown above.

Before the learned CIT(A), the Assessee did not file any submission on merits in either year. For A.Y. 2019-20, the Assessee only requested that the ex parte assessment be set aside to the AO under the proviso to section 251(1)(a) of the Act. The learned CIT(A) declined the request for want of any supporting material and, in both years, dismissed the appeals on the basis of the material available on record, upholding the validity of the reassessments and the additions.

The learned Authorised Representative (hereinafter referred to as “the learned AR”) submitted that both the assessments and both the appellate

We have heard both the parties and perused the material on record. The additions in both years rest on WhatsApp chats found in the phone of a third party during a search in another case. The Assessee did not participate in the proceedings for A.Y. 2020-21 at all. For A.Y. 2019-20, the Assessee merely denied the transaction without supporting material. The learned CIT(A) also decided both appeals without any assistance from the Assessee. Consequently, the core questions of fact, namely whether the chats evidence a loan transaction of the Assessee, the nature and source of the money, if any, and the character of the interest, have not been examined on merits with the participation of the Assessee at any stage.

The maxim “vigilantibus non dormientibus jura subveniunt”, invoked by the learned CIT(A), is well founded, and the Assessee cannot escape responsibility for the repeated non compliance. At the same time, the rule of audi alteram partem requires that an addition founded on third party material be tested after giving the person concerned a real opportunity to answer it. In our considered view, the interest of justice will be served if the Assessee is given one more opportunity before the AO, so that the issues are decided on merits on the basis of complete facts.

Accordingly, the orders of the learned CIT(A) for both years are set aside and the matters are restored to the file of the AO for fresh assessment in accordance with law, after affording a reasonable opportunity of being heard to the Assessee. The AO shall be free to examine all aspects of the