Hi Ashwin,
Assuming you have all the prompts setup along with the optional ones as well, here's what you need to do:
1) Go to the Section Expert > Highlight the section that holds subreport 1 > click the formula button beside 'Suppress' and use this code:
HasValue({Optional prompt 1}) OR HasValue({Optional prompt 2}) OR HasValue({Optional prompt 3}) OR HasValue({Optional prompt 4})
2) Next, go to the section suppression formula for the second subreport and use this code:
Not(HasValue({Optional prompt 1})) OR HasValue({Optional prompt 4})
3) Go to the section suppression formula for the third subreport and use this code:
Not(HasValue({Optional prompt 4}))
-Abhilash