Consequential penalty cannot survive after deletion of the underlying quantum addition, as the foundation for section 271E ceased to exist.

Penalty under section 271E for alleged contravention of section 269T could not be sustained where it was wholly dependent on a quantum addition that had already been deleted in assessment proceedings and that deletion had been affirmed in connected matters. Once the underlying addition ceased to exist, the foundation for the penalty also disappeared, and the penalty could not survive independently. The Revenue's attempt to maintain the penalty despite deletion of the quantum addition was rejected, and the deletion of the penalty was upheld.

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Issues: Whether the penalty imposed under section 271E for alleged contravention of section 269T could survive after the quantum addition, which formed the basis of the penalty, had been deleted.

Analysis: The penalty was levied solely on the footing of the addition made in the assessment proceedings. The quantum addition had already been deleted by the first appellate authority and that deletion had been affirmed in connected proceedings. Once the very foundation for the penalty ceased to exist, the penalty could not be sustained independently. The reliance placed on the deletion of the quantum addition was therefore decisive, and the Revenue's attempt to sustain the penalty notwithstanding such deletion was not accepted.

Conclusion: The penalty under section 271E was rightly deleted and the Revenue's challenge failed.

Final Conclusion: The appeal was dismissed, leaving the deletion of the impugned penalty undisturbed.

Ratio Decidendi: A penalty that is wholly consequential on a quantum addition cannot survive once the underlying addition is deleted.

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