Answer

1. F

   Facts

   Penalty under Sec 270A is linked to the under-reported income. If the addition is deleted in appeal, the base for penalty goes, and the penalty should be cancelled or reduced.

2. P

   Provisions and law

   • Sec 270A (now Sec 439)Penalty of 50% of tax on under-reported income, or 200% where under-reporting is due to misreporting
   • Sec 154 (now Sec 287)Rectification of mistakes apparent from record
3. A

   Analysis

   Send the appellate order to the officer and ask that the penalty order be cancelled or the proceedings dropped. If only part of the addition was deleted, for example ₹3,00,000 out of ₹5,00,000, ask for penalty to be recomputed on ₹2,00,000. If the department appeals further, the penalty may be revisited later. Keep the demand record updated on the portal.

4. C

   Conclusion

   1. 1Download the appellate order
   2. 2Write to the Jurisdictional AO asking to cancel or recompute penalty
   3. 3Update Response to Outstanding Demand with the order
   4. 4Track if the department files a further appeal

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.