Section 270A penalty cannot proceed until immunity under Section 270AA is decided, and survives no grant of immunity.

A penalty under Section 270A should not be finalised while an assessee's pending Form No. 68 request for immunity under Section 270AA(2) remains undisposed of; the penalty action must wait until the immunity application is decided. Where immunity under Section 270AA(4) has already been granted, the basis for imposing penalty under Section 270A no longer survives, and any subsequent penalty order is legally unsustainable. The stated approach is that penalty proceedings cannot proceed inconsistently with an unresolved or already allowed statutory immunity application.

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Issues: (i) Whether a penalty order under Section 270A could be sustained when the assessee's application in Form No. 68 seeking immunity under Section 270AA(2) had not been disposed of; (ii) Whether a subsequent penalty order under Section 270A could stand after immunity under Section 270AA had already been granted.

Issue (i): Whether a penalty order under Section 270A could be sustained when the assessee's application in Form No. 68 seeking immunity under Section 270AA(2) had not been disposed of.

Analysis: The assessee had moved an application for immunity from penalty, and the record did not show that the application had been decided before the penalty order was passed. In the absence of any contrary material from the Revenue, the pending immunity request had to be considered in accordance with law before penalty proceedings could be finalized.

Conclusion: The penalty order could not be sustained in its existing form and was set aside, with liberty to the Assessing Officer to proceed afresh after disposing of the immunity application; the issue was thus decided in favour of the assessee.

Issue (ii): Whether a subsequent penalty order under Section 270A could stand after immunity under Section 270AA had already been granted.

Analysis: Once immunity under Section 270AA(4) had been granted, the foundational basis for levying penalty under Section 270A ceased to exist. A penalty order passed thereafter was inconsistent with the grant of immunity and therefore lacked legal sustainability.

Conclusion: The subsequent penalty order and the appellate order confirming it were set aside; the issue was decided in favour of the assessee.

Final Conclusion: The penalty matters were not upheld in their existing form, with one matter remitted for fresh consideration after disposal of the immunity application and the other annulled on account of already granted immunity.

Ratio Decidendi: A penalty under Section 270A cannot be sustained until the assessee's statutory immunity request under Section 270AA is duly disposed of, and once immunity is granted, penalty proceedings on the same foundation cannot survive.

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