1994 (1) TMI 4

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....e Act"), at the instance of the Revenue, the two questions of law, which have been referred to this court for its opinion are : "(1) Whether, on the facts and in the circumstances of the case, the instruments written in English containing a promise and not an order to pay on hundi paper amounted to hundis in respect of which section 69D of the Income Tax Act, 1961, was applicable ? (2) If th....

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.... Appellate Assistant Commissioner took the view that the documents in respect of the borrowals were in English and not in a vernacular or oriental language and that they were only promissory notes intended to serve as collateral security. So holding, the addition was deleted. On appeal by the Revenue, the Tribunal found, on an examination of the contents of the documents evidencing the borrowals, ....

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....d been written on hundi papers, yet, we are unable to read into those documents, one of the essential characteristics of a hundi, viz., an unconditional order by the maker, directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument. Merely because the documents have been executed on hundi papers, would not make them hundi....

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....ther, the Tribunal had also found as a fact that the transactions were genuine and the parties were traceable and the transactions had also been reflected in the books of account of both the parties. Taking note of the contents of the documents, it is also quite possible that the parties thereto, had also not regarded them as hundis and that would justify the failure to resort to cheque payments. ....