G.C.Bharuka, J.

1. All these tax cases arise out of references made by the Income-tax Appellate Tribunal under Sec. 256(1) of the Income-tax Act, 1961 (hereinafter to be referred to as " the Act ").

2. Since the basic question of law in all these reference applications is common, these have been heard together and are being disposed of by this common judgment.

3. Tax Cases Nos. 16, 17 and 18 of 1978 relate to the assessment of income for the assessment years 1967-68, 19G8-69 and 1969-70. The common question of law referred for the opinion of this court in all these three cases is as follows :

" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income from the guest rooms received from the members of the club for their use and the use of their guests was not taxable ? "

4. Tax Cases Nos. 19 of 1978 and 20 of 1978 relate to the levy of penalty under Sec. 271(1)(a) of the Act for the late filing of returns for the assessment years 1968-69 and 1969-70 involving the following questions of law :

" (i) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in cancelling the order of penal