TMI Blog1998 (11) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had disclosed in his return that he has received Rs. 1,98,620 as his share as a result of an arbitration award in a pending case relating to the dissolved firm, Banyan and Berry, of which he was a partner at the time of dissolution and he has not offered the same for taxation on the ground that it is a capital receipt. Before completing assessments the Assessing Officer, in the course of proceedings for assessment of the petitioner as individual, initiated penalty proceedings in the case of the assessee in his individual status by issuing notice on March 25, 1991, for concealment under section 271(1)(c) or for not furnishing estimate of advance tax payable by him under section 273(2)(b), as the case may be. Assessment order in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. That reference came to be decided by this court on December 21, 1995. The question whether, on the facts and circumstances, the Tribunal was right in law in holding that the sum of Rs. 1,48,24,876 became taxable in the hands of the firm which according to the assessee stood dissolved by dissolution deed dated August 16, 1984, was answered in favour of the assessee by holding that the Tribunal was not right in law in holding that the said sum of Rs. 1,48,24,876 received by the partners in pursuance of the interim award and the final award became taxable in the hands of the firm which stood dissolved through dissolution deed dated August 16, 1984. As a consequence of answer to the question of law referred to this court, the Tribunal pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the assessee has in fact also meanwhile preferred appeals against the impugned orders which are pending. Ordinarily, this court, in exercise of its extraordinary jurisdiction, does not interfere where there is equally efficacious alternative remedy, nor the court interferes to allow the party to proceed with two remedies simultaneously. However, that is a rule of discretion and not the question of jurisdiction. The court may not be disinclined to exercise its extraordinary jurisdiction where it finds that the orders under challenge are manifestly erroneous and are not sustainable and leave the party to pursue the other remedy. The present is a case of that nature where from the undisputed facts it is apparent that as on the date the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned, if the point from which six months are to be reckoned is taken to be the date of the Tribunal's order, in the first instance the order has been made on July 9, 1992. It is not the case that the order has not been served on the Chief Commissioner until passing of the order. The six months from the service of the order dated July 9, 1992, had long expired before November 29, 1996, when the order was passed. The limitation for imposing penalty on that basis having already expired the Assessing Officer ceased to have jurisdiction to make any order of penalty. If the Assessing Officer was acting on the basis of the order made by the Tribunal in pursuance of the decision on the question of law referred to the High Court under section 256 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer thereafter. If the order had been made while an order determining taxable income is in existence, the remedy of the assessee is to get it set aside in appropriate proceedings. When it is brought to notice that there is no assessment of income in the hands of the assessee or the same has been set aside, the penalties too are liable to be set aside. But if no order in the penalty proceedings has been made before the order of assessment of income in respect of which such proceedings have been initiated is set aside, penalty cannot be levied thereafter. If the order setting aside assessment is subjected to further appeal, it may justify keeping the proceedings for imposing penalty pending until the final outcome of the appeal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated November 29, 1996, could not have been made either because of bar of limitation or on the ground that no tax having been found leviable in respect of the receipts in question either in the hands of the assessee in his capacity as individual or in the hands of the firm. With this obvious result emanating from the order itself, we are not inclined to relegate the petitioners to pursue alternative remedy and wait the formal result thereof. The impugned orders in each case are therefore quashed. We may make it clear that we are not expressing any opinion as to what course can be adopted by the Assessing Officer after the decision of the Supreme Court is known in the appeal preferred by the Revenue against the judgment of this court. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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