Consequential penalty under sections 271D and 271E fails when the underlying assessment is void for lack of valid approval.

Penalties under sections 271D and 271E were treated as consequential to the quantum assessments and dependent on findings of violation of sections 269SS and 269T. Once the corresponding assessments were held void for want of valid approval under section 153D, they ceased to survive in law, and the penalty orders could not exist independently of those void assessments. The penalties were therefore deleted and the appeals were allowed in favour of the assessee.

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Issues: Whether penalties imposed under sections 271D and 271E of the Income-tax Act, 1961 could survive after the corresponding quantum assessments were held to be void for want of valid approval under section 153D.

Analysis: Penalties under sections 271D and 271E are consequential to the quantum assessment and arise only from a finding of violation of sections 269SS and 269T. Once the underlying quantum assessments stood struck down, the assessments ceased to survive in law. In that situation, the penalty orders could not retain any separate existence independent of the void assessments.

Conclusion: The penalties under sections 271D and 271E were deleted and the appeals were allowed in favour of the assessee.

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