The main legal point established in the judgment is the incorrectness of the Tribunal's conclusion on the effacement of the order of the WTO under s. 18(1)(a) due to the order made by the Commissioner under s. 18(2A).

Srinivasa Iyengar, J.—These are two sets of references made under s. 27(1) of the W.T. Act, 1957 (hereinafter referred to as "the Act"), at the instance of the Commissioner of Wealth-tax and the assessee. The questions referred are four in number and relate to the penalties imposed under s. 18(1)(a) of the Act for default in filing the returns within the time without reasonable cause. The matter relates to the assessment years 1966-67, 1967-68 and 1968-69. T.R. Cs. No. 142, 144 and 146 of 1978 are at the instance of the department and the other three are at the instance of the assessee. The questions referred are as follows :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in entertaining the ground of the department that the appeals to the Appellate Assistant Commissioner and consequently the appeals to the Tribunal were incompetent ?

(2) If the answer to question No. (1) is in the affirmatives, whether the Tribunal, on the facts and in the circumstances of the case, was justified in deciding that, once an order has been passed under section 18(2A) of the Wealth-tax Act by the Commissioner, the order of the Wealth-tax Officer was effaced and hence no appeal could be filed against it to the appellate authorities ?

(3) If the answers to question No. (1) or (2) are in the negative, whether the Tribunal was justified, on the facts and in the circumstances of the case, in holding that the assessee had adequate opportunity for showing cause against the levy of penalty before the Appellate Assistant Commissioner ?

(4) If the answers to question No. (1) or (2) are in the negative, whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the quantum of penalty should be calculated with reference to the law as on the date on which the return was due to be filed and the default of not filing the return occurred ?"

2. The material facts which are not in dispute are as follows :

3. The assessee filed returns of wealth in respect of these three assessment years on February 22, 1973. As the returns had been filed beyond the prescribed time, the WTO initiated proceedings under s. 18(1)(a) and issued notice to the assessee fixing the date of hearing as April 6, 1973. The assessee filed a petition before the Commissioner for waiver of the minimum penalty leviable under s. 18(1)(a) of the Act, and by an application dated April 6, 1973, he also intimated the WTO the fact of his having filed such an application before the Commissioner and requesting the WTO to stay the penalty proceedings till the disposal of the application by the Commissioner. The proceedings were begin conducted before the WTO, I, Special Survey Circle. It, however, transpires that subsequently consequent on the abolition of the Special Survey Circle, the files were transferred to the VIth WTO, Circle I. He made an order on March 11, 1975, imposing penalties, which, according to him, were the minimum penalties imposable under the Act. It transpires that the Commissioner passed orders on the application filed under s. 18(2A) on March 21, 1975. He reduced the minimum penalty leviable and fixed them as follows :

Rs.

1966-67

5,000

1967-68

5,000

1968-69

5,000

as against the minimum penalty leviable, according to the WTO, at Rs. 16,860, Rs. 16,500 and Rs. 16,330, respectively. Consequent on this, the WTO communicated to the assessee on April 11, 1975, about the penalties as determined by the Commissioner, further intimating him that necessary challan would be issued on his request and that if the amounts were not paid, coercive steps will be taken. The assessee preferred appeals to the AAC on April 11, 1975, contending, inter alia, that he had reasonable cause for not filing the returns within time and there was no justifications for imposing the penalties and that no opportunity had been given by the WTO before he made the order levying penalties.

4. The AAC, however, dismissed the appeals by hi