RAJENDRAKUMAR ICHUBHAI KOTHARI,BHARUCH vs. ITO, WARD-1(1), BHARUCH

The present two appeals have been preferred by the assessee against the separate orders of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 11/06/2025 (quantum appeal) & 12/06/2025 (penalty appeal) passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Years (AYs) 2013-14.

During the assessment proceedings before the Ld. CIT(A), the assessee produced land records/7/12 abstract and the property deed to show that there were 4 co-owners of the property. However, the Ld. CIT(A) observed that the said documents were additional evidences and the assessee has not given plausible reason for not furnishing the same before the AO. He, therefore, rejected the additional evidences filed by the assessee and confirmed the impugned addition made by the AO.

Before us, the Ld. Counsel for the assessee has made two-fold submissions. Firstly, that the property was co-owned by the assessee along & 836/SRT/2025 Rajendrakumar Ichubhai Kothari vs. ITO Asst. Year : 2013-14 with other three co-owners. He, in this respect, has referred to the submissions and documents furnished before the AO, which is a copy of land records. As per the village form No.8A (a ledger of land No.D 7396738), the land was owned by 4 co-owners, namely, Rajendrakumar Ichchhubhai, Deepikaben, wd/o Shaileshkumar Ichchhubhai, Hardikkumar Shaileshkumar and Jashukanta alias Jashodaben Ichchhubhai. These land records were duly submitted by the assessee before the AO. Further, the affidavit of the assessee has also been filed, wherein, the lineage of Late Ichchhubhai Kuberji Kothari has been given showing that he had four legal heirs as named above out of which Jashodaben w/o Late Ichchhubhai Kuberji Kothari had died and the other three legal heirs are their sons and daughters. We note that both the lower authorities have failed to consider the aforesaid submissions of the assessee. It has been held time and again that the income- tax authorities should charge only legitimate taxes from the citizens. If the assessee’s share is only 1/4th in the property compulsorily acquired by the Government, the assessee can be charged tax to the extent of income earned on his share and not relating to the income of the other co-owners.

Secondly, the Ld. Counsel for the assessee has relied upon the provisions of section 56(2)(viii) of the Act which refers to income way of interest received on compensation or on enhanced compensation to be treated as income from other sources and further as per the provisions of section 57(iv) of the Act which states that in case of income of the nature referred to in clause (viii) of section 56(2), a deduction of a sum of equal to 50% of such income will be allowed. The Ld. Counsel therefore has submitted even otherwise the assessee is entitled to the deduction @ 50% on & 836/SRT/2025 Rajendrakumar Ichubhai Kothari vs. ITO Asst. Year : 2013-14 the interest income earned by the assessee on enhanced compensation on account of compulsorily accumulation of land by the Government.

We find force also in the above contention raised by the assessee. The issue relating to the 1/4th share of the assessee needs to be examined at the hands of the AO and the AO is also required to give statutory deduction on the above income earned by the assessee as provided u/s.57(iv) of the Act.

We, therefore, set aside the impugned order of the Ld. CIT(A) and restore the matter to the file of the AO for decision afresh on the above issues. Needless to say, that the AO will give proper and adequate opportunity to the assessee to present his case and furnish the necessary documents and thereafter the AO will give finding on both the issues as noted above by way of a speaking order and assess the income of the assessee accordingly.

So far as the penalty appeal is concerned, since we have already set aside the matter for assessment afresh to the file of the AO, therefore, the impugned penalty, at this stage, has no legs to stand and the same is, accordingly, ordered to be deleted. It is made clear that if the AO in the freshly passed assessment order will be of the view that the case of the assessee is fit for levy of penalty, he will be at liberty to initiate fresh penalty proceedings in accordance with law.