JASTEJ GOROWARA,BHOPAL vs. COMMISSIONER OF INCOME-TAX (APPEALS), DELHI

PER SIDDHARTHA NAUTIYAL - JM: These two appeals have been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 27.12.2022 & 26.06.2023 passed for A.Ys. 2011-12 & 2015-16. 2. The Assessee has raised the following grounds of appeal: “1, That the addition of Rs. 90 lakhs made u/s 68 and confirmed by the Honourable CIT(A) be held to be bad in law, unjustified and without appraisal of full facts submitted on record. The addition made is requested to be quashed and deleted. 2. The appellant craves leave to add, amend or alter any Ground of Appeal before or during the course of appellate proceedings.”

ITA Nos. 276&277/Ind/2025
A.Ys. 2011-12 & 2015-16
“1. That the disallowance of interest expenditure at Rs. 49,30,325/- by the learned A.O. and confirmed by the Honourable CIT(A) be held to be unjustified and unreasonable and be quashed and deleted.
2. In the alternative and without prejudice to the ground stated above the disallowance made by the learned A.O. and confirmed by Learned CIT(A) be held to be high and unreasonable and be suitably reduced.
3. The appellant craves leave to add, mend or alter any Ground of Appeal before or during the course of appellate proceedings.”
First we shall deal with ITA No. 276/Ind/2025 (A.Y. 2011-12)
3. The brief facts of the case are that the assessee, Shri Jastej Gorowara, proprietor of M/s Ranjit’s Golden Oak Resorts, Bhopal, was subjected to reassessment proceedings for A.Y. 2011–12. The Assessing Officer reopened the assessment by issuing notice under section 148 of the Income-tax Act,
1961 (“the Act”). The reopening was based on information received from the Investigation Wing that the assessee had purchased an immovable property worth ₹2,40,40,000/- through open auction from UCO Bank and that part of the investment, including unsecured loans of ₹90,00,000/- and alleged unexplained investment of ₹73,30,464/-, had escaped assessment. In response to the notice under section issued notice u/s 148 of the Act, the assessee filed a return of income on 23.05.2016 declaring total income of ₹43,26,048/-. During the course of assessment, the Assessing Officer examined unsecured loans aggregating to ₹90,00,000/- received from six persons of the Khanduja family.
Though the assessee furnished confirmations, PAN details and bank statements of the lenders, the Assessing Officer observed that immediately prior to issuing cheques to the assessee, there were substantial cash deposits in the bank accounts of the lenders. The assessee was asked to explain the source of such cash deposits, to which the assessee replied that the assessee had no knowledge of the source of cash in the lenders’ accounts and that the Assessing Officer

ITA Nos. 276&277/Ind/2025
A.Ys. 2011-12 & 2015-16
may directly enquire from them. The Assessing Officer issued notices under section 133(6) of the Act to the lenders, who confirmed the loans and explained that the amounts were advanced interest-free due to family and business relations, with an intention of future joint business which did not materialise. The Assessing Officer, however, was not satisfied with these explanations. He held that the lenders had failed to establish the source of cash deposits made prior to advancing the loans, that their creditworthiness was not proved and that the genuineness of the transactions was doubtful. The Assessing Officer, placed reliance on the cases of CIT v. P. Mohankala (2007)
291 ITR 278 (SC), CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal v. CIT (1995) 214 ITR 801 (SC), held that the assessee had failed to discharge the onus of proving identity, creditworthiness and genuineness of the loan transactions. Accordingly, the unsecured loans of ₹90,00,000/- were treated as unexplained cash credits and added to the total income. The total income was assessed at ₹1,33,26,050/- and penalty proceedings under section 271(1)(c) were also initiated.
4. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) and raised various grounds challenging the validity of reopening under section 147 as well as the addition made under section 68. However, during the appellate proceedings, despite issuance of several notices fixing the appeal for hearing on multiple dates, the assessee did not file any written submissions nor effectively pursue the appeal.
No adjournment was sought and no supporting evidence or arguments were placed on record before the CIT(Appeals). The CIT(Appeals) therefore proceeded to decide the appeal ex parte on the basis of material available on record. While dealing with the grounds challenging the reassessment, the CIT(Appeals) concurred with the Assessing Officer and held that the ITA Nos. 276&277/Ind/2025
A.Ys. 2011-12 & 2015-16
reopening was validly initiated after recording reasons and obtaining due approval, and that the assessee had failed to substantiate any infirmity in the reopening proceedings. On the substantive ground relating to addition of ₹90,00,000/- under section 68, the CIT(Appeals) observed that the Assessing
Officer had examined the issue in detail and that the assessee had failed to discharge the statutory onus of proving creditworthiness of the lenders and genuineness of the loan transactions. In the absence of any effective rebuttal or evidence from the assessee during appellate proceedings, the CIT(Appeals) upheld the addition made by the Assessing Officer. Relying upon the settled legal position laid down by the Hon’ble Supreme Court in CIT v. P.
Mohankala (291 ITR 278), CIT v. Durga Prasad More (82 ITR 540) and Sumati Dayal v. CIT (214 ITR 801), the CIT(Appeals) held that mere confirmations were not sufficient and that surrounding circumstances and human probabilities had to be considered. Accordingly, the CIT(Appeals) dismissed all the grounds of appeal raised by the assessee and upheld the assessment order in toto. In the result, the appeal of the assessee was dismissed.
5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.
6. The Counsel for the assessee submitted before that during the assessment proceedings, the assessee had furnished confirmations of loans, copies of income-tax returns and bank statements of all loan creditors and, upon request of the assessee, the Assessing Officer had also issued notices under section 133(6) to such creditors, who duly responded confirming the loans and explaining the reasons for advancing the same. Despite this, the addition was made, which was challenged before the CIT(Appeals).

ITA Nos. 276&277/Ind/2025
A.Ys. 2011-12 & 2015-16
7. We note that the assessee has filed application for condonation of delay of 747 days in filing of the present appeal. As regards the delay of 747 days in filing the present appeal and the non-appearance before the CIT(Appeals), the Counsel submitted that in Form No. 35 filed before the CIT(A), the email ID of the erstwhile counsel, Late Shri Ashwini Rinwa, was mentioned and the assessee had specifically opted that notices may not be sent through email.
However, several hearing notices were issued by the CIT(Appeals) to an incorrect and inactive email ID of the erstwhile counsel, while other notices, though sent to the correct email IDs including the official email of the assessee, were inadvertently missed. Consequently, the appeal came to be dismissed ex parte. It was further submitted that the assessee is the only male child of his parents and, during the relevant period, both parents suffered from serious medical ailments. The assessee’s mother underwent multiple angioplasty procedures during 2022–2023 and an open-heart surgery in 2024, while his father was also hospitalised on multiple occasions for cardiac and respiratory issues. Due to these unavoidable and compelling personal circumstances, the assessee could not properly attend to the appellate proceedings. The situation was further aggravated by the unfortunate demise of the erstwhile counsel on 22.11.2024. After engaging the present counsel and upon checking the e- proceeding portal, the assessee came to know for the first time that the first appeal had already been dismissed, following which immediate steps were taken to file the present appeal. The Counsel submitted that the delay was bona fide, unintentional and due to circumstances beyond the control of the assessee.
It was also argued that the learned CIT(Appeals) dismissed the appeal in limine without adjudicating the grounds on merits, which is contrary to section 250(6) of the Act, relying upon the judgment of the Hon’ble Bombay High
Court in Premkumar Arjundas Luthra (HUF) v. CIT [2016] 240 Taxman 133
and the decision of the Hon’ble Supreme Court in Collector, Land Acquisition

ITA Nos. 276&277/Ind/2025
A.Ys. 2011-12 & 2015-16
v. Mst. Katiji (1987) 167 ITR 471 (SC). On these facts, a prayer was made for condonation of delay and for restoration of the matter to the file of the CIT(Appeals) for fresh adjudication on merits.
8. We have heard the rival contentions and perused the material on record.
We find that the assessee has filed an application seeking condonation of delay of 747 days in filing the present appeal and has explained the reasons for such delay as well as for non-appearance before the learned CIT(Appeals). From the material placed on record, it is evident that the delay occurred due to a combination of factors, namely, non-effective service and inadvertent missing of appellate notices, serious and prolonged medical issues in the family of the assessee, and the unfortunate demise of the erstwhile counsel. We are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed time and that the delay was neither deliberate nor with any mala fide intention. Respectfully following the principles laid down by the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji (1987)
167 ITR 471 (SC), we condone the delay of 747 days in filing the present appeal.
9. We further note that the learned CIT(Appeals) has dismissed the assessee’s appeal ex parte without adjudicating the issues raised on merits.
Such disposal is not in consonance with the mandate of section 250(6) of the Act, which requires the first appellate authority to pass a reasoned order dealing with each ground of appeal. In the interest of substantial justice, we are of the considered view that the assessee deserves one more effective opportunity to prosecute the appeal before the first appellate authority.
10. Accordingly, without expressing any opinion on the merits of the additions made in the assessment order, we set aside the impugned order

ITA Nos. 276&277/Ind/2025
A.Ys. 2011-12 & 2015-16
passed by the learned CIT(Appeals) and restore the matter to his file for de- novo adjudication in accordance with law. The learned CIT(Appeals) shall decide the appeal afresh on merits after affording reasonable opportunity of being heard to the assessee and after considering all submissions and evidences that may be placed on record.
11. The assessee is directed to cooperate fully and diligently pursue the proceedings before the CIT(Appeals). With these directions, the appeal of the assessee is allowed for statistical purposes in the interest of justice.
12. In the result, the appeal of the assessee is allowed for statistical purposes.
Now we come to ITA Number 277/Ahd/2025 (A.Y. 2015-16)
13. We observe that the facts and issues for consideration are similar for both years under consideration.
Therefore, appeal in ITA
Number
277/Ahd/2025
is also restored to file of CIT(Appeals) for de-novo consideration and delay in filing appeal is also condoned in the interest of justice.
14. In the result, both the appeals of the assessee are allowed for statistical purposes.
This Order pronounced on 23/ 12/2025 (BHAGIRATH MAL BIYANI)
JUDICIAL MEMBER
Indore; Dated
23 .12.2025
Tanmay, Sr. PS

ITA Nos. 276&277/Ind/2025
A.Ys. 2011-12 & 2015-16
आदेशकȧ ĤǓतͧलͪपअĒेͪषत/Copy of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. Ĥ×यथȸ / The Respondent.
3. संबंͬधतआयकरआयुÈत/ Concerned CIT(A)
4. आयकरआयुƅ(अपील) / The CIT(A)-
5. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयअͬधकरण, अहमदाबाद/ DR, ITAT, Indore
6. गाडŊफाईल/ Guard file.
आदेशानुसार/ BY ORDER,
(Dy./Asstt.