9911796707
TMI Blog1995 (1) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the circumstances of the case, the Tribunal is correct in law in holding that the provisions of section 69D cannot be applied in respect of the transactions where the identity is established or the loan is genuine ?" We may make it clear at this stage itself that if we are to answer in the affirmative the common question referred to us then the second question formulated in R.C. No. 60 of 1987 will really not survive and need not be answered. In all three references the assessee happens to be a company. The facts in R. C. No. 52 of 1987 are stated for the sake of convenience. The facts are almost similar in all the three references for the purpose of understanding the question referred. During the year ending on March 31, 1980, i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05/1-12, (Sd.) New Malakpet, Managing Director Hyderabad-500 036. Notice of dishonour, Waived." The Tribunal, on a close examination of the facts and the legal position broadly obtainable found that the borrowing on such documents was in the nature of pro note and though the document was styled and titled as hundi payable, the borrowings had not been raised in the money market by issue of hundis, but the borrowing was done directly or through a broker from recognised money-lenders. The Tribunal held that, in the facts and circumstances, the provisions of section 69D of the Act were not attracted. The Tribunal remanded the case to the Income-tax Officer for examination of the genuineness of the loans. The reference is made by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It may be pointed out that there is no definition of "hundi" either in the Income-tax Act or in the Negotiable Instruments Act. The Indian Stamp Act of 1899, while defining "bill of exchange" in section 2(2), has provided as follows : " 'Bill of exchange' means a bill of exchange as defined by the Negotiable Instruments Act, 1881, and includes also a hundi, and any other document entitling or purporting to entitle any person, whether named therein or not, to payment by any other person of, or to draw upon any other person for, any sum of money." The definition is thus inclusive and shows that a hundi is also a specie of bill of exchange. There is no dispute that there is no direct authority under the Act of any High Court on the point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w points involved. We propose to approach the question independently for obvious reasons. The documents under consideration in the references at hand are admittedly in the English language. They purport to be hundis. All the documents are addressed by the assessee to itself. To put it slightly differently, the drawer and the drawee are the same in all these transactions. The documents are written on printed forms of hundi. We are in full agreement with the view expressed by the Full Bench of the Calcutta High Court in Harsuk Das v. Dhirendranath, AIR 1941 Cal 498, that the use of the word "hundi" on the stamped document is not decisive. The total contents and effect of the document have to be looked into for finding out as to whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndorsee of a forged hundi was compelled to cancel the indorsement." In the Calcutta case, referred to above, it has been held that to determine the character of the document the provisions of the document itself must be looked into. The word "hundi" on the stamp could not determine the character of the document and since the document contained a promise and not an order, it was a promissory note and not a hundi, or bill of exchange. The word "acceptance" meant assent on the part of the drawee. There are numerous sub-species of hundis. They have been illustrated by the learned authors Bhashyam and Adiga in their above-referred book. Other authors have also given similar illustrations. From all the authorities describing the hundi transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are in English and not in the 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. Though it may not be wholly accurate to say that all the instruments which are not drawn in the vernacular cannot be hundis, there is no doubt whatsoever that the absence of oriental language in the document coupled with the fact that the transaction is only bilateral and not tripartite is conclusive to show that the instrument though titled a hundi was not really a hundi transaction. The transactions are very much on the lines of a promissory note where it is a bilateral transaction. It is not the form but the substan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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