Penalty cannot survive after reassessment is quashed and quantum addition is deleted, ITAT Hyderabad held.

Penalty under section 271(1)(c) for earlier years and under section 270A for a later year could not survive once the reassessment was quashed and the related quantum addition was deleted. Because the penalty arose solely from additions made in assessment proceedings, and those foundational additions no longer existed, the penalty proceedings had no independent footing. The penalty orders were therefore unsustainable and were deleted.

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Issues: Whether the penalty levied under section 271(1)(c) for the earlier assessment years and under section 270A for the later assessment year could survive after the reassessment was quashed and the related quantum addition was deleted.

Analysis: The penalty arose solely from additions made in assessment proceedings. The reassessment for the earlier years had already been held invalid, and the addition for the later year had been deleted in quantum proceedings. Once the foundational assessment/addition no longer survived, the penalty proceedings had no independent footing and could not be sustained.

Conclusion: The penalty orders were unsustainable and were deleted.

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