Penalty under section 271AAB(1A) fails when the quantum additions are deleted and no subsisting basis remains.

Penalty under section 271AAB(1A) could not be sustained where the additions forming its foundation were deleted in quantum proceedings and only one issue was restored to the Assessing Officer for fresh consideration. As the jewellery and unexplained investment additions were fully deleted, no completed addition remained for the relevant assessment year to support the levy. The penalty order was therefore set aside because the underlying tax basis for imposition had ceased to exist.

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Issues: Whether penalty levied under section 271AAB(1A) of the Income-tax Act, 1961 survived after the additions forming the basis of the penalty were deleted in quantum proceedings and the remaining issue was restored to the Assessing Officer.

Analysis: The penalty was founded on additions made in assessment proceedings. In quantum appeal, the addition relating to jewellery and the addition relating to unexplained investment in property were deleted in full, while the addition relating to unexplained cash was restored for denovo consideration. As no completed addition remained against the assessee for the relevant assessment year, the basis for levy of penalty stood eroded.

Conclusion: The penalty under section 271AAB(1A) was unsustainable and did not survive. The issue was decided in favour of the assessee.

Final Conclusion: The penalty order was set aside because the underlying quantum basis for its imposition no longer existed.

Ratio Decidendi: Penalty imposed with reference to additions in assessment cannot be sustained when the additions are deleted in quantum proceedings and no subsisting tax addition remains to support the levy.

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