Answer

1. F

   Facts

   Penalty depends on the addition. If the appeal deletes the addition, the penalty falls with it. You can ask the officer to keep penalty proceedings in abeyance until the appeal is decided, though this is not automatic.

2. P

   Provisions and law

   • Sec 274 (now Sec 471)No penalty without giving the person a reasonable opportunity of being heard
   • Sec 246A (now Sec 357)Appeal to the Commissioner (Appeals)
   • Sec 270A (now Sec 439)Penalty of 50% of tax on under-reported income, or 200% where under-reporting is due to misreporting
3. A

   Analysis

   Reply to the show cause stating the appeal number and date, and request that proceedings be kept in abeyance. Also give a short reply on merits, so you are covered if the officer proceeds anyway. If a penalty order is passed, appeal it within 30 days as well. If the addition of ₹8,00,000 is later deleted, ask for the penalty to be cancelled.

4. C

   Conclusion

   1. 1Get the appeal acknowledgement number
   2. 2Reply to the penalty notice requesting abeyance and giving brief merits
   3. 3If penalty is levied, appeal it within 30 days
   4. 4Seek cancellation once the addition is deleted

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