Penalty cannot survive when quantum assessment is quashed for invalid section 143(2) notice and jurisdictional defect.

Penalty under section 271(1)(c) could not survive once the quantum assessment was quashed for want of a valid notice under section 143(2). The assessment had been framed with additions under sections 68 and 69C read with section 115BBE, but the Tribunal had already held that the jurisdictional defect in issuing the notice by the proper officer vitiated the assessment. As the foundational assessment ceased to exist, the penalty based on those additions had no independent footing and was deleted.

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Issues: Whether penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 could survive after the quantum assessment was quashed for want of valid notice under section 143(2) of the Income-tax Act, 1961.

Analysis: The assessment had been completed under section 143(3) of the Income-tax Act, 1961 with additions under sections 68 and 69C read with section 115BBE of the Income-tax Act, 1961. The Tribunal had already quashed the assessment on the ground that the jurisdictional notice under section 143(2) had not been issued by the proper officer before completing the assessment, resulting in a jurisdictional defect. Once the foundation assessment itself ceased to exist, the penalty founded on those very additions could not be sustained.

Conclusion: The penalty under section 271(1)(c) of the Income-tax Act, 1961 was deleted and the appeal was allowed in favour of the assessee.

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