Judgment

S. K. DAS, J.: These are four appeals on certificates granted by the High Court of Calcutta under S. 66-A (2) of the Indian Income-tax Act, 1922. The appeals are from the decision of the High Court dated February 28, 1961 in Income-tax Reference No. 49 of 1956.

2. We may first state the relevant facts. One P. J. P. Thomas is the appellant before us. He was the assessee before the taxing authorities. He held 750 A shares in J. Thomas & Co., Ltd., of S Mission Row, Calcutta. The assessee entered into an engagement to marry one Mrs. Judith Knight, stated to be a divorcee, and the engagement was announced in certain newspapers on September 3, 1947. On December 10, 1947 the assessee and Mrs. Knight presented to the Company an application to transfer the said 750 A shares to Mrs. Judith Knight. A transfer deed of that date stated :

"I, Philip John Plasket Thomas of, 8, Mission Row, Calcutta, in consideration of my forthcoming marriage with Judith Knight of 35, Ridgeway, Kingsbury, London (hereinafter called the said transferee) do hereby transfer to the said transferee the 750 A shares numbered 1-750 standing in my name in the books of J. Thomas and Co. Ltd., to hold to the said transferee............Executors, administrators and assigns, subject to the several conditions on which I hold the same at the time of the execution thereof. And I the said transferee do hereby agree to take the said shares subject to the same conditions."

On December 15, 1947 the Company transferred the shares to Mrs. Judith Knight and registered her as the owner of the shares. On December 18, 1947 the marriage was solemnised. On January 26, 1948 the fact of marriage was communicated to the Company and the name of the shareholder was changed in the books of the company to Mrs. Judith Thomas. It is undisputed that during the relevant periods the shares stood registered in the name of the assessee s wife and when the income in question arose to her she was the wife of the assessee. The four accounting years with which the assessments were concerned were those ending respectively on April 30, 1948, April 30, 1949, April 30, 1950 and April 30, 1951. The four assessment years were 1949-1950, 1950-1951, 1951-1952 and 1952-1953. It appears that for the years 1949-1950 and 1950-1951 assessments of P. J. P. Thomas which had by then been already completed were reopened under S. 34 of the Indian Income-tax Act, 1922 and the dividends of Rs. 97,091/- and Rs. 78,272/- as grossed up and paid to Mrs. Judith Thomas during the accounting years ending April 30, 1948 and April 30, 1949 were re-assessed in the hands of P. J. P. Thomas. For the assessment years 1951-1952 and 1952-1953, the dividends paid by the company to Mrs. Judith Thomas during the accounting periods ending April 30, 1950 and April 30,1951 were held by the Income-tax Officer to be includible in the total income of P. J. P. Thomas under S. 16(3) (b) of the Act and accordingly orders were passed including the sums of Rs. 1,00,000/- and Rs. 16,385/- being the grossed up dividends for the two years respectively in the total income of P. J. P. Thomas.

3. Against the said assessment orders the assessee preferred appeals to the Appellate Assistant Commissioner. By a common order dated May 11, 1955 the Appellate Assistant Commissioner confirmed the orders of the Income-tax Officer holding that not only the provision of S. 16 (3) (b) but also the provision of S. 16(3)(a)(iii) of the Act applied in these cases. Against the order of the Appellate Assistant Commissioner the assessee preferred four appeals to the Appellate Tribunal and contended (1) that he transferred the shares to Mrs. Judith Knight when she was not his wife, (2) that the transfer of shares was absolute at the time when it was made and no condition was attached to the transfer, and(3) that the transfer was for adequate consideration. On these grounds the assessee contended that the provisions of S. 16 (3) of the Act were not attracted to the c