Deb, J. - (1.) In this reference under Section 66(1) of the Indian I.T. Act, 1922, we are concerned with the following questions of law : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in treating the penalties as having been imposed under Section 221 of the Income-tax Act, 1961, and not under Section 46(1) of the Indian Income-tax Act, 1922 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Appellate Assistant Commissioner was competent to hear the appeals though the assessee had not paid the relevant taxes before the filing of the appeals before him ? "
(2.) The facts stated by the Tribunal may now be stated by us. The assessee is an individual. He did not pay income-tax for the assessment years 1948-49, 1949-50 and 1950-51. The assessments for the aforesaid years were completed long before the 1st April, 1962. The ITO, therefore, issued notices under Section 46(1) of the Indian I.T. Act, 1922, to the assessee to show cause why penalties should not be imposed on him. The assessee did not show any cause. The ITO, therefore, imposed penalties under Section 46(1) of the Indian I.T. Act, 1922.
(3.) The assessee filed appeals before the AAC without paying the relevant taxes. The AAC reduced the penalties for the aforesaid three years.;