Commissioner of Income Tax vs Paranjothi Salt Co.

K.A. Swami, C.J.—In this tax case, the following questions are referred to this court for opinion :

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in deleting the addition of Rs. 30,972 assessed as income u/s 69D of the Income Tax Act, 1961, for the assessment year 1978-79?

(2) Whether the Appellate Tribunal''s view that the documents executed by the borrowers in favour of the assessee should not be treated as hundis within the meaning of section 69D of the Income Tax Act, 1961, is maintainable in law?"

It is noticed that the Tribunal has not recorded any finding as to whether the instrument in question can be construed as a hundi or a pronote. Such a finding is necessary for the purpose of section 69D of the Income Tax Act. If it is held that the instrument is a pronote, the amount covered by the pronote cannot at all be included as an income for the purpose of assessment u/s 69D of the Act, as held by a Division Bench of this court in Commissioner of Income Tax Vs. Paranjothi Salt Co., . As the Tribunal has not recorded the necessary finding, it is not possible to answer the questions referred to us.

We, accordingly, return the reference and remit the matter to the Tribunal for deciding the case on merits and in accordance with law and in the light of the observations made in this order and also in the decision of this court in Commissioner of Income Tax Vs. Paranjothi Salt Co., . The reference is returned unanswered. However, there will be no order as to costs.