BANERJEE, J.

1. This is a reference under s. 66(1) of the Indian IT Act, 1922.

2. The assessment year involved is the year 1960-61, corresponding to the previous year ended on September 30, 1959.

The reference has been made in the circumstances hereinafter stated in brief. The assessee, Abhijit Sen, during the relevant period was a director of a private company known as M/s Sen and Pandit Private Ltd. He used to receive a sum of money by way of salary and a further sum by way of house allowance. The assessee himself, his brother, Sanjoy, and his father, Sudhir Kumar, were also sharesholders in the private company and used to receive dividends declared by the company on their respective shares. On February 5, 1958, Sudhir Kumar transferred, by way of gift, 10,000 shares in the private limited company to the wives of his two sons, namely, the assessee and Sanjoy, each getting 5,000 shares. On the same day, the assessee and Sanjoy each made a gift of 5,000 shares in the private company to their mother, wife of Sudhir Kumar. Also on the same day, the assessee and Sanjay each made a gift of 5,000 shares in the Private Company to the wife of the other brother and a further 5,000