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Judgment
PER MAHAVIR SINGH, VP:
This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi ['the CIT(A)'] in Appeal No. NFAC/2010-11/10136907 dated 29 Jan 2026, passed under section 250 of the Income Tax Act, 1961 ('the Act'), confirming the penalty levied under section 271(1)(c) of the Act for the Assessment Year 2011-12.
Briefly stated, the facts are that the assessment in this case was framed by the NFAC, Delhi under section 147 read with section 254 read with section 144B of the Act vide order dated 22.09.2021, determining the total income of the Assessee at Rs 10,85,000 after making addition, penalty proceedings under section 271(1)(c) of the Act were initiated, and penalty of Rs 1,84,885 was levied vide order dated 17.03.2022. The appeal of the Assessee against the penalty was dismissed by the CIT(A) vide the impugned order. Aggrieved, the Assessee is in appeal before us.
It is a matter of record that the quantum addition, which constituted the very foundation of the penalty, has since been deleted. The appeal of the Assessee against the order of the CIT(A) in the quantum proceedings was allowed by a Co-ordinate Bench of this Tribunal in ITA No. 599/Del/2026 for the Assessment Year 2011-12, vide order dated 17.03.2026, and the addition made in the assessment order stands deleted.
The Learned Counsel for the Assessee submitted that since the addition forming the basis of the penalty has been deleted by the Tribunal in the quantum proceedings, the penalty under section 271(1)(c) of the Act cannot survive. The Learned Senior Departmental Representative could not controvert this factual position.
We have heard both the sides and perused the material on record. The position in law is well settled. Penalty under section 271(1)(c) of the Act is levied with reference to the concealment of income or the furnishing of inaccurate particulars of income embodied in the addition made in the assessment. Where the addition itself is deleted in the quantum proceedings, the very substratum of the penalty disappears, and the penalty cannot survive. Since the addition made in the assessment order dated 22.09.2021 has been deleted by the Co-ordinate Bench of this Tribunal in the quantum appeal, the penalty levied under section 271(1)(c) of the Act, being consequential to that addition, has no legs to stand on. The Assessing Officer is, accordingly, directed to delete the penalty levied under section 271(1)(c) of the Act.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on conclusion of hearing on 9th July, 2026.