Consequential penalty under section 271(1)(c) fails when the reassessment addition itself is held without jurisdiction.

Penalty under section 271(1)(c) cannot stand where it is based entirely on an addition made in reassessment proceedings and that addition has already been held to be beyond the Assessing Officer's jurisdiction under section 147. The penalty is consequential to the quantum addition, so once the underlying addition is found to be without jurisdiction, the related concealment penalty loses its independent basis and is deleted.

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Issues: Whether penalty levied under section 271(1)(c) of the Income-tax Act, 1961 was sustainable when the underlying reassessment addition had been held to be beyond jurisdiction.

Analysis: The penalty was founded entirely on the addition made in reassessment proceedings. The quantum dispute had already been determined against the Revenue on the ground that the Assessing Officer lacked jurisdiction to make the addition under section 147 of the Income-tax Act, 1961. Once the very basis of the addition was found to be without jurisdiction, the consequential penalty imposed for the same addition could not survive independently.

Conclusion: The penalty under section 271(1)(c) of the Income-tax Act, 1961 was rightly deleted and the Revenue's challenge failed.

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