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TMI Blog2019 (3) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst which the appellant had borrowed Rs. 14,25,000 were bills of exchange and not Hundies and consequently erred in not holding that they are not covered by the provisions of section 69D. 2. On facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the addition of Rs. 14,25,000 made by the Assessing officer as loans/borrowing in the Hundies which were repaid in cash from undisclosed income. 3. On facts and circumstances of the case and in law, the Ld. CIT (A) erred in not considering the appellant's ground that the impugned block assessments are not sustainable in law in view of the decision of the Hon'ble Chennai ITAT, in Mani and Money Ltd vs Deputy Commissioner of Income-tax (2013} 38 taxmann.c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the appellant's residence and were put in seized loose paper file. During the course of search action, the appellant has offered the entire amount as undisclosed income in his own hand is better his statement recorded u/s. 132(4). However, while filing the return of income for the block period the appellant has not offered the same for taxation. The appellant has tried to explain during the course of block assessment proceedings that the seized hundies were proposed borrowals. Appellant's submission was not found acceptable in view of his own statement and also because it was written on the seized hundies as "cash paid". In view of the above fact, the AO has added an amount of Rs. 14,25,000/- u/s 69D of the Act to the total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows: (1) There arc always three parties to such a transaction. They arc drawer, drawee, and payee. The drawer cannot himself be the drawee. If the transaction is bilateral, it is a very strong indication to show that it is not a hundi transaction. (2) Hundi is payable to satisfy a person or order but negotiable without endowment by the payee. (3) The holder of Hindi is entitled to sue on its basis without any endorsement in his favour. (4) Hundi once, accepted by the donee, could be negotiated without endorsement (5) In case of loss of hundi, the owner can claim duplicate or triplicate from the drawer and present the same to the drawee for claiming the payment. (6) Hundi is normally in oriental language as per the mercanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sons (1982) 14 TTJ 0546 (enclosed), where it was held that "...s. 69D applies only to instruments which tire negotiable without endorsement and that negotiability is the principal test to find out whether a document is a hundi or not, in these transactions the documents are in English. These are promotes payable to order. There are only two partis and not three parties like bills of exchange. These documents are negotiable only by endorsement because these are till promissory notes payable to order. So merely because it is written on hundi paper and because the grounds of appeal before the AAC were prepared on the basis that these are hundi documents, these documents will not acquire the character of hundi transactions. The essential ingr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the same, he confirmed the addition. 8. Against the above order, the assessee has filed appeal before us. 9. We have heard both the counsel and perused the records. We find that the ITAT was fully aware of the facts of the case and it had remitted the issue to the file of the ld. CIT(A) to examine the fact as to whether the handi and bills of exchange are legally different instruments and the same cannot be equated. We find that the ld. CIT(A)'s order is not sustainable inasmuch as he has acted as appellate authority to the order of the ITAT. On merits also, we note that as already noted by the ITAT above, section 69D applies to hundi alone and not to bills of exchange. Regarding the issue of hundi and bills of exchange, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exchange and at other times promissory notes and are subject to local usages and are unaffected by the provisions of the Indian Negotiable Instrument Act." The Hon'ble High Court has further concluded as under: We feel that one of the reasons for bringing s, 69D of the Act on the statute book is to cover the Hundi transaction in view of the wording of s. I of the Negotiable Instruments Act. Now considering the present transactions as pointed out already, we find that apart from the fact that the contents of the documents are in English and not in oriental language, the transactions are not between three parties at all. The transactions aforesaid are all bilateral. The drawer himself is the drawee in all the transactions under question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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