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2023 (9) TMI 508 - AT - Income TaxAssessment completed u/s. 144 - protective addition on account of fictitious sale - bogus transactions and inflation of purchases by the main group - HELD THAT:- As substantive addition in the hands of M/s Fortune Creation Pvt. Ltd[main group] has already been made by the assessing officer, which was confirmed by ld CIT(A) also. Since the substantive addition has been sustained hence there is no loss to the Revenue. As main group has accepted the impugned transaction as their income, therefore, protective addition in the hands of the assessee needs to be deleted. Based on this factual position, delete the protective addition in the hands of the assessee. Penalty u/s 271(1)(c) imposed on the fictitious sale - HELD THAT:- As AO deleted the entire addition made by the Assessing Officer, therefore the penalty imposed by the Assessing Officer, on the quantum addition needs to be deleted. Also Penalty under section 271(1)(c) of the Act, should not be imposed on protective addition. See case of Bhailal Manilal Patel [2014 (10) TMI 621 - GUJARAT HIGH COURT]. Penalty u/s 271(1)(b) - Once the foundation fails, the superstructure also fails i.e. the addition also is to be deleted. In this regard, I rely on the legal maxim “Sublato fundamento cadit opus” (meaning thereby that foundation being removed, structure /work falls). Hence the initial action of the Revenue itself is not in consonance with law, then all the subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. Therefore delete the penalty imposed by the Assessing Officer under section 271(1)(b) - Assessee appeal allowed.
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