Pending appeal against assessment bars penalty order under the Income-tax Act, with the impugned penalty set aside.

A penalty order under Section 270A of the Income-tax Act could not be sustained where the assessment order was already the subject of a pending appeal under Section 246A. Section 275 bars passing a penalty order in such circumstances, and the record showed that the appeal had in fact been filed before the Commissioner (Appeals). On that basis, the penalty proceedings could not be concluded by the impugned order, which was quashed and set aside in favour of the assessee.

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Issues: Whether a penalty order under Section 270A of the Income-tax Act, 1961 could be passed when the assessment order was already the subject matter of a pending appeal under Section 246A of the Act.

Analysis: The assessment order had been appealed against and the record showed that the appeal had in fact been filed. Section 275 of the Income-tax Act, 1961 bars the passing of a penalty order under the relevant chapter where the assessment order is the subject matter of appeal before the Commissioner (Appeals) under Section 246A. In view of the pending appeal, the penalty proceedings could not be concluded by passing the impugned order.

Conclusion: The impugned penalty order under Section 270A of the Income-tax Act, 1961 was not sustainable and was quashed and set aside in favour of the assessee.

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