The court's decision was based on the principle that a penalty under Section 271(1)(c) cannot survive if the underlying addition has been deleted.

1. At the instance of the Revenue, the following question has been referred to this court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the penalty of Rs. 5,000 imposed under Section 271(1)(c) of the Income-tax Act, 1961?"

2. The Income-tax Officer made an addition of Rs. 29,673 which was credited to the Amanat Khata by the assessee, rejecting the plea of the assessee that the said amount was held thereby as a trustee. Also penalty to the extent of Rs. 5,000 was levied treating that amount as concealed income, under Section 271(1)(c) of the Income-lax Act, 1961. From the order of the Appellate Tribunal, it is amply clear that addition of Rs. 29,673 has been deleted. No information has been furnished to us by standing counsel whether the Revenue has gone in reference in the quantum matter and, therefore, the addition of Rs. 29,673 having been deleted, the penalty imposed under Section 271(1)(c) cannot survive.

On these facts, we answer the above question in the affirmative, against the Revenue and in favour of the assessee. No order as to costs.