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Since the amount of Rs.12 crores have been taken by assessee as loan from the Bank through the respective agreements referred to above, therefore, it could not be treated as undisclosed income of the assessee. The assessee has explained source of Rs.12 crores through the loan taken from the Bank. Therefore, provisions of Section 69B of the I.T. Act, would not apply to the case of the assessee. Further, it was not the case of the A.O. that provisions of Section 69B are attracted in the case of assessee. Therefore, the Ld. CIT(A), could not have bring to tax the aforesaid amount through new source of income. Considering the above discussion in the light of above decisions, it is clear that provisions of Section 56(2)(vii)(b) and Section 69B of the I.T. Act are not applicable in this case.

Shanti Prime Publication Pvt. Ltd.

Section 56 & 69B of the Income-tax Act, 1961 – Income from other sources – Provisions of Section 56 (2)(vii)(b) and 69B would not apply to the case of assessee as no commercial transaction have been entered into between assessee and his brothers and there is no colourable device.

Facts: Assessee was paid a sum against relinquishment of their rights in the property. AO noted that provisions of Section 56(2)(vii)(b) are attracted and the exclusion provided in proviso to Section regarding "relatives" does not apply in this case and made addition under section 56(2)(vii)(b). CIT(A) noted that since it is a commercial transaction, therefore, it is not out of love and affection and confirmed the findings of the AO.

Held, that since there was a Family Settlement between the assessee and three brothers and they have acted upon Family Settlement Deed and distributed various properties among themselves and necessary rights and title are transferred in favour of each brother would show that parties have entered into genuine transaction. As per the Family Settlement Deed, it was agreed that property in question with superstructure shall be taken by the assessee and that as per the Settlement Deed, the assessee has to contribute a sum of Rs.20 crores from his own resources/capital or through the borrowed funds as part of the Family Settlement to balance the settlement between brothers. Therefore, no commercial transaction have been entered into between the assessee and his brothers and there is no colourable device. We may also note that admittedly settlement was executed for distribution of different properties between the assessee and his brothers which was having no commercial purpose. It may also be noted here that authorities below rejected the claim of assessee because the transaction was not executed out of natural love and affection. The word 'natural love and affection' have not been specified in Section 56(2)(vii)(b). Therefore, this term has no consequence to the above provisions in which the A.O. made the addition. Since the amount of Rs.12 crores have been taken by assessee as loan from the Bank through the respective agreements, therefore, it could not be treated as undisclosed income of the assessee. The assessee has explained source of Rs.12 crores through the loan taken from the Bank. Therefore, provisions of Section 69B and 56 (2)(vii)(b) would not apply to the case of assessee. In the result, appeal of Assessee partly allowed – GOVIND KUMAR, KHEMKA Vs. ACIT [2020] 181 ITD 586 (ITAT-DELHI)