R. BALIA, J. ( 1 ) THESE petitions are arising in the same facts and circumstances and are founded on common grounds and are therefore heard and decided together. ( 2 ) THE facts necessary for the present purposes may be noticed. The petitioner in each case was a partner in firm M/s. Banyan and Berry which itself was assessed as a registered firm until before its dissolution on 16. 8. 84. For the A. Y. 1988-89 the assessee had disclosed in his return that he has received Rs. 1,98,620. 00 as his share as a result of arbitration award in a pending case relating to dissolved firm M/s. Banyan and Beri of which he was a partner at the timeof 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 petitioner as individual, initiated penalty proceedings in the case of assessee in his individual status by issuing notice on 25. 3. 91 for concealment under sec. 271 (1) (c) or for not furnishing estimate of Advance Tax payable by him under sec. 273 (2) (b), as the case may be. Assessment order in the case of partners were made on 27. 3. 91 on protective basis considering the said receipt to be taxable income. In respect of the receipt of total amount of the award under arbitration, the firm was also assessed to tax. Assessment of the firm was also completed on 27. 3. 91. An appeal had been preferred by the assessee in his individual capacity in each case as well as by the firm. While the assessment in the hands of the firm was affirmed by the C. I. T. (Appeals) on 28. 8. 91, by order dated 23. 2. 92, the assessment order in the case of each of the petitioners in their individual status was set aside by holding that since the assessment of the entire amount is liable to be taxed in the hands of the firm by treating it to have accrued during the previous year relevant to A. Y. 1988-89, when the amount of the award has been received by the partners. No further proceedings against setting aside of the order in the case of individual partners was carried further by the revenue. No further proceedings against setting aside of the order in the case of individual partners was carried further by the revenue. The matter of assessment, as far as each petitioner in his individual capacity is concerned , was set it rest. ( 3 ) THE order of assessment in the case of firm was carried in appeal before the tribunal. The tribunal also confirmed the order of assessment on 9. 7. 92. The order was further subject to a reference application which was granted and was subject-matter of I. T. Reference No. 175/93 before this court. That reference came to be decided by this court on 21. 12. 95. 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. 00 became taxable in the hands of the firm which according to the assessee stood dissolved by dissolution deed dated 16. 8. 84 was answered in favour of 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 firm which stood dissolved through dissolution deed dated 16. 8. 1984. As a consequence of answer to the question of law referred to this court, the tribunal passed order under sec. 260 on 8. 4. 96, setting aside the assessment order in the case of firm also. The appeal of the firm stood allowed. Thereafter, on 29. 11. 96, the impugned orders have been made in each of the case levying penalty of various sums under sec. 271 (1) (c)/273 (2) (b ). ( 4 ) THE A. O. was of the opinion that as period of limitation u/s 275 of the Income-tax Act for imposing penalty would expire notwithstanding that there was no existing assessment imposing tax liability on the assessee in respect of which a ssessee could be held responsible for concealment inviting penalty u/s. 271 (1) (c) or to furnish estimate of Advance Tax payable byhim inviting penalty u/s. 273 (2) (b) as the revenue is to challenge the order of the High Court in appeal before the Supreme Court, imposed the penalty in various sums u/s 271 (1) (c)/273 (2) (b ). Those orders have been challenged in each of the petitions on the ground that the orders are not sustainable on the face of it and have been made in wholly arbitrary and unjust manner. The petitioners invited interference of this court notwithstanding that the orders are appealable under the provisions of the Income-tax Act. After rule was issued ex-parte interim order was granted, the ex-parte interim order has been affirmed on hearing of the parties on 24. 6. 1997. We are informed that as the period of limitation for exercise of right of appeal was to expire, the assessee has in fact also meanwhile preferred appeal against the impugned orders which are pending. ( 5 ) 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. ( 6 ) PRESENT is a case of that nature where from the undisputed facts it is apparent that as on the date penalty orders were made there were no subsisting assessment order either against any petitioner in his individual capacity or against the firm for which as partners, if so permissible under law, could be subjected to any penalty. The only ground which has weighed with the Assessing Officer to levy penalty is that otherwise he would lose his limitation to impose penalty which according to him may become imposable in case the apex court on an appeal upsets the decision of this court rendered in the case of the firm. ( 7 ) THIS reasoning is apparently unsustainable. The bar of limitation for imposing penalty under sec. 275 envisages that where relevant assessment order is subject-matter of an appeal to the Commissioner (Appeals) under sec. 246 or appeal to the appellate tribunal under sec. 253 the penalty can be imposed within 6 months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, of the appellate tribunal is received by the Chief Commissioner or the Commissioner. 246 or appeal to the appellate tribunal under sec. 253 the penalty can be imposed within 6 months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, of the appellate tribunal is received by the Chief Commissioner or the Commissioner. The other contingency having already expired we are not making reference to it. Obviously the object of this provision is to see that penalty imposable accords with final assessment. Until assessment, during the course of which penalty proceedings have been initiated, becomes final, the penalties imposable too cannot be determined with certainty which is referable to tax liability of the assessee. ( 8 ) SO far as the question of limitation is concerned, if the point from which 6 months are to be reckoned is taken to be the date of tribunals order, in the first instance the order has been made on 9. 7. 92. It is not the case that the order has not been served on the Chief Commissioner until passing of the order. The 6 months from the service of the order dated 9. 7. 92 had long expired before 29. 11. 96 when the order was passed. The limitation for imposing penalty on that basis having already expired the A. O. ceased to have jurisdiction to make any order of penalty. If the A. O. was acting on the basis of the order made by the tribunal in pursuance of the decision on the question of law referred to High Court under sec. 256 (1), that order too was made on 8. 4. 96 and must have been served within reasonable time thereof. That order which resulted in setting aside the assessment itself could not furnish foundation for levy of any penalty. ( 9 ) THUS, as on the date the A. O. made the orders levying penalty, there was no assessment standing against the assessee taxing the income with reference to which penalty could be levied, either in his capacity as individual or against the firm of which he was a partner. The question of any concealment of income or non-furnishing of estimate of Advance Tax payable in respect of income chargeable to tax for that assessment year could not be there. The question of any concealment of income or non-furnishing of estimate of Advance Tax payable in respect of income chargeable to tax for that assessment year could not be there. Penalty for concealment of income or furnishing incorrect particulars of income for any assessment year can be in respect of income which was found to be taxable for such assessment year but was not disclosed or in respect of which inaccurate particulars were furnished. Likewise levy of penalty for failure to furnish estimate of advance tax payable by an assessee u/s 273 (2) (b) also presupposes that there existed taxable income during the previous year relevant to assessment year in question in respect of which advance tax was payable by the assessee. Once order setting aside the assessment order in the course of which penalty proceedings have been initiated has become final, the penalty proceedings initiated in respect of such proceedings cannot survive to be dealt with by the A. O. 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 assessee or the same has been set aside, the penalties too are liable to be set aside. But if no order in penalty proceedings have 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 final outcome of appeal and then to make order to accord with taxable income as determined, in such case the limitation prescribed u/s 275 will be with effect from receipt of such order by the commissioner. Else it will result in a situation that though assessee has been held to have no taxable income for the year in question, yet for concealment thereof or for furnishing inaccurate particulars thereof or for non-furnishing estimate of advance tax payable thereon will be levied without there being primary obligation of assessee to furnish the sameis founded. Levy of penalty for some alleged breach of obligation postulates pre-existing obligation to perform the alleged act. Levy of penalty for some alleged breach of obligation postulates pre-existing obligation to perform the alleged act. It is not the case, nor can it be, that even when there is no taxable income is found to be in the hands of an assessee, still he can be held responsible to disclose such non income or furnish estimates of advance tax which is not payable by him. The penalty order on that account becomes without foundation. ( 10 ) IF the A. O. was considering a state of affairs likely to come into existence on some future date as a result of the order of the High Court for setting aside in further appeal, the event has not arisen to furnish any ground to the A. O. to levy penalty on that basis. In that event, he could have acted only on setting aside of the order, which would have required the tribunal to make a fresh order under sec. 260 on the appeal. ( 11 ) LOOKED from any angle, the order dated 29. 11. 96 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 petitioners to pursue alternative remedy and wait the formal result thereof. ( 12 ) 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 A. O. after the decision of the Supreme Court is known in appeal preferred by the revenue against the judgment of this court. The parties shall be free to agitate whatever questions arise in respect of action that may be taken by the A. O. then. ( 13 ) ACCORDINGLY, these petitions succeed. The impugned order levying penalty in each case is quashed. Rule in each case is made absolute. There shall be no order as to costs. .