Penalty under section 271(1)(c) cannot survive when fresh assessment accepts returned income with no addition.

Where a fresh assessment under section 143(3) read with section 254 accepted the returned income and made no addition, penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars could not survive because the statutory basis of tax sought to be evaded disappeared. The penalty was therefore deleted in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could survive when, in the fresh assessment, no addition was made and the returned income was accepted.

Analysis: The fresh assessment order passed under section 143(3) read with section 254 of the Income-tax Act, 1961 accepted the returned income and made no addition to the total income. In such a situation, the basis for invoking penalty for concealment of particulars of income or furnishing of inaccurate particulars no longer survived, because the penalty is linked to tax sought to be evaded on account of an addition over and above the returned income.

Conclusion: The penalty could not be sustained and was deleted in favour of the assessee.

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