Penalty under section 271(1)(c) cannot stand when the underlying capital gains addition no longer survives.

Penalty under section 271(1)(c) could not survive once the underlying capital gains addition arising from the joint development arrangement had already been decided in favour of the assessee. The stated reasoning is that, when the quantum addition no longer subsists, the basis for alleging concealment of income or furnishing of inaccurate particulars also falls away. In that situation, the penalty cannot stand independently of the quantum determination, and the revenue's challenge fails.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable when the quantum addition on account of capital gains had already been decided in favour of the assessee.

Analysis: The appeals arose after the quantum dispute concerning capital gains from the joint development arrangement had been conclusively resolved in favour of the assessee by the earlier decision governing the same transaction. Once the underlying addition did not survive, the foundation for alleging concealment of income or furnishing of inaccurate particulars also disappeared. In such circumstances, the penalty could not stand independently of the quantum determination.

Conclusion: Penalty under section 271(1)(c) of the Income-tax Act, 1961 was not exigible, and the revenue's appeals failed.

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