Penalty under section 271(1)(c) falls when the reassessment addition itself is deleted, cancelling the concealment basis.

Penalty under section 271(1)(c) could not survive once the reassessment addition on which it was founded was deleted. The penalty had been imposed solely because of that addition, and when the Tribunal removed the addition, the basis for alleging concealment or furnishing of inaccurate particulars disappeared. The Tribunal was therefore justified in cancelling the penalty, and the issue was decided in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could survive after the addition made in the reassessment was deleted.

Analysis: The penalty was imposed on the footing of the addition made in the reopened assessment. Once the Tribunal deleted that addition, the foundation for the penalty disappeared. Penalty under section 271(1)(c) cannot stand independently when the assessment addition on which it is based no longer survives.

Conclusion: The Tribunal was justified in cancelling the penalty, and the question was answered in the affirmative in favour of the assessee.

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