Penalty and extended limitation cannot survive once the substantive dispute is decided in the assessee's favour.

Earlier binding findings in the assessee's own case were treated as no longer open, and the remaining penalty issue fell with the merits because the substantive dispute was decided in the assessee's favour. As the foundation for invoking the extended period of limitation and sustaining penalty did not survive, those connected consequences could not be maintained on the same basis. The question on penalty and extended limitation was therefore answered in favour of the appellant and against the respondent.

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Issues: (i) Whether, in view of the earlier decision in the assessee's own case, the question on penalty and extended period of limitation was to be answered in favour of the appellant.

Analysis: The questions already decided in the assessee's own case were treated as no longer arising in this appeal. On the remaining question relating to penalty, the disposal of the merits in the appellant's favour meant that the basis for sustaining the extended period and penalty did not survive.

Conclusion: The question on penalty and extended period of limitation was answered in favour of the appellant and against the respondent.

Final Conclusion: The appeal was disposed of by applying the earlier binding decision for the connected questions and granting relief to the appellant on the penalty-related issue.

Ratio Decidendi: Where the substantive dispute is decided in favour of the assessee, the connected issue of extended limitation and penalty cannot be sustained on the same foundation.

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