TMI Blog2019 (3) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the assessee. - IT(SS) No. 4592/Mum/2017 - - - Dated:- 27-2-2019 - Shri Shamim Yahya, AM And Shri Amarjit Singh, JM For the Appellant : Shri Viraj Mehta Shri Nilesh M. Patel For the Respondent : Shri H. N. Singh ORDER PER SHAMIM YAHYA, A. M.: This appeal by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-10, Mumbai ( ld.CIT(A) for short) dated 31.03.2017 and pertains to the Block Period 01.04.1989 to 16.11.1999. 2. The grounds of appeal read as under: 1. On facts and circumstances of the case and in law, the Ld. CIT (A) erred in not holding that the instruments against which the appellant had borrowed ₹ 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 ₹ 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above fact, the AO has added an amount of ₹ 14,25,000/- u/s 69D of the Act to the total income of the assessee, 6. Thereafter, the ld. CIT(A) noted the assessee s submissions as under: 1.1.23 Next issue that requires you honour's kind consideration is addition of ₹ 14,25,000/- made under section G9D of the Act, The Hon'ble ITAT in this regard held that The learned Counsel appearing for the assesses submitted that hundi and bills of exchange are legally different instruments and cannnot be equaled. We direct the CIT(A) to examine the issue afresh in accordance with law. 1.1.24 In this regard, we submit/enclose the Bills of Exchange aggregating to ₹ 14,25,000/- tor your records. From the said instruments, it will be seen that they art; titled as 'Bills of Exchange', The Appellant humbly submits that for provisions of section 69D of the Act-to be invoked, amount borrowed or repaid should be on a hundi form. 1.1.25 The term Hundi has not been defined in the income-tax Act. 1961. Therefore, whether an instrument is a Hundi can be determined by taking into consideration the well-recognised characteristics of Hundi. 1.1.26 Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not satisfy the test of negotiability. In the present case, the instruments art; negotiable only by endorsement, due to the instruments being payable to order. Reliance in this regard is placed on the decision of the Hon'ble Chennai ITAT in the case of /TO vs. M.K.A. ChinnasivainyNaflar 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 ingredients to make a document, a hundi document, are absent in this case. So s. 69D cannot be applied. 1.1.29 Further, the instruments have been drawn in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paper Book. 4. It is therefore an undisputed fact that appellant has drawn Bill of Exchange and not Hundi. 5. As per Section 69D of the Act, only if Hundi's are drawn other than account payee cheque then addition can be made under this section. 6. In our case, appellant has drawn Bill of Exchange and not Hundi. Hence, question of addition u/s 69D does not arise. 7. Reliance is placed on folio wed judicial pronouncements:- a. SLP dismissed by Apex Court in case of CIT v. Thiraviarathna Nadar (1991) 187 ITR(St.)37 b. CIT v. Dexan Pharmaceuticals Pvt Ltd. (1995) 126 CTR 57 (AP HC) c. CIT c. Paranjothi Salt Co. (1995) 211ITR 141 (Mad HC) d. CIT vs. Capital Flour Mills Pvt. Ltd. (2007) DGLS 1579 (Del HC) e. CIT vs. Ram Nivas (2008) DGLS 79 (Del HC) f. ITO vs. M.K.A Chinnaswamy Nadar Sons (1982) 14 TTJ 546 (Chen.ITAT) 10. While examining the present case on the touch stone of the above, we note that the Hon ble Andhra Pradesh High Court in the case of Dexan Pharmaceuticals Pvt Ltd. (supra) has noted that A bill of exchange in the vernacular language is generally called as hundi. Hundies are negotiable instruments written in an oriental language. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
