1982 (3) TMI 179

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....or repaid on hundies otherwise than through account payee cheque) and added Rs. 15,000 to the returned income. The AAC held that the instruments are not hundies and, therefore, deleted the addition. Hence, the departmental appeal. 2. The assessee had borrowed from M/s Ramesh & Co., by cheque on 17th May, 1978 a sum of Rs. 10,000. The assessee then executed in English two instruments for Rs. 5,0....

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....actions. The AAC held that for an instrument to be a hundi, it must be in oriental language, which it is not. So in his view, s. 69D cannot be applied. Hence the departmental appeal. 3. The Deptl. Rep. argued that the document is written on hundi paper and that, therefore, the parties have understood and treated it as hundi transactions and that, even the grounds of appeal before the AAC procee....

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.... have a peculiar characteristic acquired by custom and trade usage of negotiability without endorsement. It was pointed out that the Central Board which administers IT Act has understood hundies as instruments which have negotiability without endorsement and that these documents in question are negotiable instruments only by endorsement because these are all promissory notes payable to order and t....

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....re, not hundies. Later, Madras Bench 'A' of the Tribunal (Camp : Madurai) in the case of Second ITO, Tuticorin vs. M/s Grahalakshmi & Co. in ITA No. 377 (Mds)/81 (asst. yr. 1978-79) to which one of us, the Vice President was a party, has added one more reason, that s. 69D applies only to instruments which are negotiable without endorsement and that negotiability is the principal test to find out w....