C. M. Lodha, C.J. - These are four connected applications u/s 27(3) of the WT Act, 1957 (which will hereinafter be referred to as 'the Act'), for requiring the ITAT, Jaipur, to state a case and refer the following questions of law arising out of its order dated October 13, 1977, passed in WT Appeals Nos. 74(JP)/76-77, 75(JP)/76-77(JP)/76-77 and 77 (JP)/76-77 -
'(i) Whether on the facts and circumstances of the case, the ITAT was right in holding that the order passed by the WHO on 1-11-1973 was an order u/s 18(1)(c) of the WT Act, 1957 and not an order giving effect to the order of the CWT passed u/s 18(2A) of the WT Act, 1957 and therefore, an appeal would lie before the AAC and the Tribunal ?'
(ii) Whether on the facts and in the circumstances of the case, the ITAT was right in holding that the conduct of the assessee was not contumacious or dishonest and was right in cancelling the penalties ?'
2. The asst. yr. under consideration in all the cases in 1970-71. The facts in these cases are more or less identical and for our purposes it would be sufficient to state the facts of one case. We take case No. 69 of 1978 :
The original assessment u/s 16(3) of the Act was completed on March 31, 1971. The Assessee failed to disclose the value of the shares of M/s Lila Sons Breweries (P) Ltd. Bhopal, amounting to Rs. 15,000/-. However, he filed revised return on January 13, 1972, on the basis of which the WHO passed an order of re-assessment u/s 17 of the Act and included the valuation of the said shared. It may be stated, here, that the WHO started the proceedings for re-assessment against the assessee in order to tax the escaped wealth by his notice dated February 5, 1972. At the time of passing the order for re-assessment, the WTO also initiated penalty proceedings u/s 18(1)(c) of the Act and issued notice u/s 18(2) r/w s. 18(1)(c) of the Act to the assessee. Apprehending imposition of penalty, the assessee had already moved an application before the CWT u/s 18(2A) of the Act on January 6, 1972, stating therein that on account of bonafide mistake on his part, the value of the shared had not been disclosed in the original return, and therefore, it was prayed that the penalty imposable may either be waived or reduced. The CWT by his order dated October 3, 1973, reduced the penalty from imposable penalty of Rs. 15000/- to Rs. 7,500/-. In pursuance of the aforesaid order of the Commr., the WHO, by his order dated November 1, 1973, issued a demand notice and challan for the amount of penalty of Rs. 7,500/- as determined by the Commr. The assessee thereupon preferred an appeal from the order of the WTO to the AAC, Bikaner Range, Bikaner, who by his order dated May 21, 1976, dismised the appeal holding that the order of the Commr. could not be questioned. Aggrieved by the order of the AAC, the assessee filed further appeal before the ITAT before whom a preliminary objection was taken on behalf of the Revenue that no appeal lay u/s 18(2A). There was, however, a difference of opinion between the Judicial Member of the Tribunal and the Accountant Member. The Judicial Member held that the appeal was entertainable and that no penalty could have been levied. The learned Accountant Member was however, of the view that no appeal lay to the Tribunal and in this view of the matter, he directed that the appeal be rejected as not maintainable. There being difference of opinion between the two members of the Tribunal, the questions were referred to the President of the Tribunal u/s 24(2) of the Act. The learned third Member to whom the matter was referred, held that an appeal does lie against the impugned order passed by the WTO and thus concurred in the view taken by the Judicial Member. Since the Accountant Member had not given his opinion on merits of the appeal, the matter again came up for consideration before the Accountant Member who agreed with the findings arrived at by at he Judicial Member on merits, with the result that the appeal filed by the assessee was allowed and the order imposing penalty was quashed. It is sufficient to state that Tribunal passed a consolidated order in respect of ail the four appeals as the points in controversy were identical.
3. Thereafter, the CWT moved an application u/s 27(1) of the Act before the Tribunal requiring it to draw up a statement of the case and refer two questions of law arising out of it. The Tribunal, however, by its order dated April 24, 1978, dismissed the application holding that no question of law arose out of its order. Consequently, this application has been made to this Court u/s 27(3) of the Act.
4. No body has appeared on behalf of any of the assessees in these cases. Consequently, we have heard the learned counsel for the Department ex parte. It is urged that the question regarding maintainability of the appeal is a pure question of law and since there is no decided case on the point either of the Supreme Court or of this Court, the Tribunal should have stated the case and referred the question of law arising out of its order. We have also perused the relevant orders of the Tribunal and are satisfied that a question of law arises out of the Tribunals order dated October 13,1977.
5. We may state, here, that the second question submitted before the Tribunal is not a question of law, but is a question of fact and in the circumstances of the case, it would not arise, if the answer to the first question is returned in the negative. However, if the answer to the first question is returned in the affirmative then, as an inevitable consequence, the assessee would succeed as the finding on the second question which is one of the fact is in his favour.
6. Accordingly, we allow these applications in part and direct the Tribunal to state a case and refer the following question to this Court.
'Whether on the facts and circumstances of the case, the ITAT was right in holding that the order passed by the WTO on November 1, 1973, was an order u/s 18(1)(c) of the WT Act. 1957 and not an order giving effect to the order of the CWT passed u/s 18(2A) of the WT Act, 1957, and therefore, an appeal would lie before the AAC and the Tribunal.'
7. The reference may be submitted within six months of the order. There will be no order as to costs of these applications.