Penalty under section 271(1)(c) cannot stand once the quantum additions are deleted and concealment is not independently proved.

Penalty under section 271(1)(c) could not survive once the underlying quantum additions were deleted in appeal. The Tribunal noted that the additions were based on alleged receipts treated as advances, and that the tax authorities' conclusions lacked credible evidence. As the foundation for the penalty ceased to exist and concealment was not independently established, the penalty was deleted and the connected appeals were allowed.

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Issues: Whether the penalty levied under section 271(1)(c) of the Income-tax Act, 1961 could survive after the corresponding additions were deleted in quantum appeal for the relevant assessment years.

Analysis: The penalty was founded on additions made in assessment and confirmed in first appeal. The quantum additions were subsequently deleted by the Tribunal on the ground that the alleged receipts were advances and not taxable income, and that the conclusions reached by the tax authorities were unsupported by credible evidence. Once the foundation of the penalty ceased to exist, there remained no basis to sustain the penalty under section 271(1)(c).

Conclusion: The penalty could not be sustained and was deleted; the issue was decided in favour of the assessee.

Final Conclusion: The connected appeals were allowed and the penalty orders were set aside in respect of both assessment years.

Ratio Decidendi: A penalty under section 271(1)(c) cannot survive when the quantum addition on which it is based is deleted and the alleged concealment is not independently established.

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