Penalty under Section 272A cannot survive when the foundational addition and consequential penalty have been deleted.

Whether a penalty under Section 272A(1)(d) can subsist where the primary assessment addition and the consequential penalty were deleted: the Tribunal reasoned that the deletion of the foundational unexplained money finding and the consequential penalty removed the legal basis for a separate administrative penalty, so the Section 272A(1)(d) penalty was unsustainable on these facts and was deleted; appeal allowed for the assessee by ITAT on that ground.

---

---

Issues: Whether the penalty of Rs. 40,000/- imposed under Section 272A(1)(d) of the Income-tax Act, 1961 survives where the underlying quantum addition and consequential penalty (under Section 271AAC(1) of the Income-tax Act, 1961) have been deleted by the appellate authority.

Analysis: The Tribunal examined the sequence of orders: the quantum addition treated as unexplained money and the consequential penalty under Section 271AAC(1) were deleted by the appellate authority. The Tribunal considered whether a penalty levied under Section 272A(1)(d) can subsist when the foundational addition and the related penalty have been set aside, taking into account the legal connection between a primary assessment determination and consequential penalties. The Tribunal noted that the deletion of the quantum and the deletion of the consequential penalty undermine the basis for the separate penalty under Section 272A(1)(d), making the latter unsustainable in the facts of the case.

Conclusion: The penalty of Rs. 40,000/- imposed under Section 272A(1)(d) of the Income-tax Act, 1961 is deleted; the appeal is allowed in favour of the assessee.

---