PER B.R. MITTAL, JM:- The Department has filed this appeal for the assessment year 1996-97 against the order of the ld. CIT(A)-III, Jaipur dated 13-06-2011 wherein following ground has been raised. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in:- (i) deleting the penalty of Rs. 18,60,782/- imposed by the A.O u/s 271(1)( c) of the I.T. Act, 1961without appreciating the facts of the case. 2.1` The notice sent to the assessee by Registered Post has been received back userved. Considering the facts of the case, we have heard the ld. DR who in her submissions relied on the order of the A.O. 2

2.2 On perusal of the order of the ld. CIT(A), we observed that penalty has been levied by the A.O on account of two additions i.e. Rs. 40 lacs u/s 68 of the Act and Rs. 6,51,997/- as unexplained adjustment of license fee. We observed that in respect of first addition of Rs. 40.00 lacs, the Tribunal deleted the said addition. However, in respect of second addition of Rs. 6,51,997/-, the Tribunal remanded the matter back to the file of the ld. CIT(A). In view of the above facts, the ld. CIT(A) vide para 2.3 of his impugned order held that levy of penalty u/s 271(1) (c ) of the Act are no more remained in existence, which was the foundation for levy of penalty. We agree with the ld. CIT(A) that if the quantum has been deleted and /or yet to be decided/ finalized, the levy of penalty u/s 271(1) (c ) of the Act does not survive. In this regard, we consider it relevant to refer to the decision of Honble Rajasthan High Court in the case of CIT vs. Cosmopolitan Trading Corporation, 274 ITR 640 wherein it was held that when the entire addition has been deleted in the quantum appeal, no reason survives for sustaining the penalty. Since the addition of Rs. 40.00 lacs has been deleted by the Tribunal and other addition of Rs. 6,51,997/- has been set aside to the ld. CIT(A) for his fresh consideration, we uphold the order of the ld. CIT(A). Further, we may state that the A.O will be at liberty to take an appropriate action in respect of the addition of Rs. 6,51,997/- after the order is passed by the ld. CIT(A) to consider whether levy of penalty is called for not as per provisions of law. Hence, the ground of appeal taken by the Department is rejected. 3

3. In the result, the appeal of the Department is dismissed subject to above observations. The order is pronounced in the open Court on 15-01-2013. Sd/- Sd/- (B.R. JAIN) (B.R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Jaipur Dated: 15 th JAN 2013 *Mishra Copy forwarded to:- By Order

1. The ACIT, Circle- 7, Jaipur

2. M/s. Mangi Lal & Party, Jaipur 3.The ld. CIT 4.The ld. CIT(A) 5.The ld. DR 6.The Guard File (IT No.793/JP/11) A.R. ITAT: JAIPUR 4 5