U.N. Bhachawat, J. - This is a reference under Section 256(1) of the Income Tax Act, 1961, (for short, herein after referred to as 'the Act'), at the instance of the assessee, whereby the following questions have been referred by the Income Tax Appellate Tribunal, Delhi Bench (C) for our opinion:-

"1. Whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in holding that Income Tax Officer had the option to assess individually the members of the AOP, which was formed in the account year relevant to the assessment year 1956-57 and continued upto the assessment year 1956-57 and continued upto the assessment year 1964-65.?

2. Whether the shares of the two members of the AOP were rightly held by the Tribunal to be half and half in the income or it should have been held that the shares were undefined and consequently no assessment could be made on the members of the AOP individually?

3. Whether the Tribunal was right in holding that the members of the AOP took the subject matter of the gift dated 28-12-51 and 23-8-52 as tenants-in-common and not as joint tenants?

4. Whether the gifts made by the two deeds of gift - deeds dated 28-12-1951 and 23-8-1952 constituted gifts to hindu undivided family?"

2. There were two appeals before the Tribunal being Income-Tax Appeal Nos.3109 and 3111/73-74. These appeals were dispose of by a common order dated 29th August 1973 and, as identical questions of law arose from the said order of the Tribunal, a consolidated statement of case was drawn and the aforesaid questions have been referred for our opinion.

3. The relevant assessment years are 1963-64 and 1964-65. The material facts leading to the present reference-as per the statement of the case are these. The assessee Smt. Sudba Khemka is the wife of Krishna Kumar Khemka (hereinafter referred to by her name or as the assessee). S.R. Khemka, father-in-law of the assessee, by two memoranda of gifts dated 28th December 1951 and 23rd August 1952 gifted certain shares in joint stock companies and cash to the assessee and her husband. The said gifts were accepted by these donees; the shares were got registered by them in their joint names and the cash was deposited by them in their joint account with Jiyajeerao Cotton Mills. Ltd., Gwalior, under the name of Krishna Kumar & Sudha Khemka Jt. A/C. All the dividends received by them on the said shares as also the interest on the said cash were credited to the said joint account with Jiyajeerao Cotton Mills Ltd. or to another joint account later opened by Krishna Kumar Khemka and Smt. Sudha Khemka with the United Commercial Bank, Ltd., Gwalior. Thus, the donees elected for and continued the joint management of the gifted property and accretions, thereto. Out of the said credits, the donees purchased other shares and sold part of the same as also some of the shares gifted to them by S.R. Khemka. As a result of these sales, Krishna Kumar Khemka and smt. Sudha Khemka (the assessee) - the donees, were held to be dealers in shares and the resultant surplus taxed. Krishna Kumar Khemka and Smt. Sudha Khemka returned their income, as in the earlier years, in the status of an association of persons in respect of the income of the joint account, i.e., dividends and interest. The Income Tax Officer computed the income of the said association of persons on the return submitted by it, but did not make any assessment on the said return. He, however, assessed Krishna Kumar Khemka and Smt. Sudha Khemka each on one half of the income from dividends and interest as also one half of the surplus realized on the sales of shares.

4. Appeals were individually filed before the Appellate Assistant Commissioner by the association of persons as well as Krishna Kumar Khemka and Smt. Sudha Khemka. The Appellate Assistant Commissioner dismissed these appeals and held that Krishna Kumar Khemka and Smt. Sudha Khemka formed an association of persons; it was open to the Department to assess each memb