Ajit K.Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment years 1983-84 and 1984-85, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the addition made by the Income-tax Officer on account of the estimated income on diverted funds"
(2.) Shortly stated, the facts are that in the periods relevant to the assessment years 1983-84 and 1984-85, the assessee-Hindu undivided family permitted its three coparceners to use an aggregate sum of Rs. 90,000 for earning income. The Assessing Officer, after rejecting the assessee's claim that no interest was received by the assessee-Hindu undivided family on the above interest-free debts, estimated the sum of Rs. 13,500 as income on "diverted funds" on the basis of past records and added the same to the income of the assessee. The addition was confirmed on appeal by the Commissioner of Income-tax (Appeals).
(3.) Being aggrieved, the assessee challenged the addition in appeal before the Tribunal. The Tribunal confirmed the addition observing as under : "We have considered the matter. The uncontroverted fact is that there was no total partition of the family ; nor was there a partial partition either as regards the three members of the family who took the so-called advance or as regards the so-called advances in question. In the circumstances, therefore, we must hold that the aggregate sum of Rs. 90,000 remained the property of the family. We are not impressed by Shri Damle's argument that the said sum was advanced as a loan by the family to the three members. Had it been so, there would have been some written agreement to go by. There would have also been some stipulation as to interest. But none of these features are present here. It is, therefore, impossible to accept the theory of loan advanced on behalf of the assessee. In this connection, we find that the said theory had also been put forward on behalf of the assessee in the wealth-tax proceedings relating to the assessment years 1978-79 and 1979-80. And the Tribunal, by its order dated September 15, 1988, in Wealth-tax Applications Nos. 55 and 55/(Cal) of 1988, rejected the said theory. In view of the foregoing, therefore, we reject the ground relating to this issue.";