CIT is bound to apply ITAT’s order in Revision proceedings even if further appeal is pending before High Court. Revision application can be moved against penalty order even if concerned additions have been challenged in quantum appeal:

Assessee challenged the penalty order before CIT by moving a revision application u/s 264 which was rejected by CIT on two grounds viz. (1) The issue in quantum appeal has not attained finality since the Hon’ble High Court had admitted quantum appeal preferred by the Revenue against order of ITAT deleting the concerned additions on which penalty was levied & (2)Revision proceedings are contemplated only to mitigate the situation faced by the assessee who are unable to approach appellate authorities for relief. It was held by the Hon’ble High Court that in case CIT was inclined to decide the Revision petition without waiting for High Court’s decision in quantum appeal, he was duty bound to apply the order of ITAT as it stood at that time. It was further held that the fact that the assessee had preferred appeal against quantum additions would not take away his right to file revision application against the penalty order.

[ARYAMAN SPINNERS PVT. LTD. - SCA 10636 of 2012 - GHC]