Penalty under section 271(1)(c) cannot survive once the underlying quantum addition is deleted.

A penalty under section 271(1)(c) cannot ordinarily survive where the quantum addition on which it is founded has already been deleted, because the underlying basis for concealment or inaccurate particulars no longer exists. Here, the Tribunal had deleted the assessment addition for the relevant year, and the Revenue did not dispute that position; accordingly, the penalty order could not be sustained and was set aside in favour of the assessee.

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Issues: Whether penalty levied under section 271(1)(c) of the Income-tax Act, 1961 could survive after the quantum addition for the same assessment year had been deleted.

Analysis: The penalty was founded on the assessment addition made by the Assessing Officer. Once the quantum addition for the year under consideration had already been deleted by the Tribunal, the basis for sustaining the penalty ceased to exist. The Revenue did not dispute this position.

Conclusion: The penalty could not be sustained and the order confirming penalty was set aside in favour of the assessee.

Ratio Decidendi: Where the addition on which a penalty under section 271(1)(c) is founded is deleted, the penalty cannot ordinarily survive for want of the underlying basis.

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