( 1 ) THIS reference under Section 256 (2) of the I. T. Act, 1961, arises in respect of the assessment year 1947-48. The assessee is alleged to be an association of persons consisting of one Rama Devi Agarwalla along with Asrafii Devi Agarwalla, Gini Devi Agarwalla, Bimala Devi Agarwalla and Chameli Devi Agarwalla.

( 2 ) THE facts as appearing from the statement of the case and the annexures thereto show that on the 8th August, 1945, the said five ladies purchased from one Regent Estate Ltd. half share in premises Nos. 31 and 32, Tincori Basu Lane and 38 and 39, Bhairab Dutt Lane, all in Salkia, Howrah, for a sum of Rs. 1,68,000. On the 2nd April, 1946, the said five ladies by a deed of conveyance sold their shares in the premises to one New India Building and Land Improvement Society Ltd. for a sum of Rs. 4,20,000 resulting in a surplus of Rs. 2,50,000 earned by them.

( 3 ) ON the 27th January, 1978, the ITO, Special Circle-Ill, Calcutta, issued a notice under Section 34 (1) (a) of the Indian I. T. Act, 1922, for the assessment year under reference upon Rama Devi Agarwalla and others. On receipt of the said notice, they moved an application under Article 226