Penalty doesn’t survive on an addition which has either been deleted in quantum appeal or has been restored to the file of AO for verification:

AO levied penalty on addition made u/s40(a)(ia). Hon’ble ITAT observed that penalty was levied on two items of which, one item was deleted by the Hon’ble ITAT in quantum appeal and as regards the second item, the matter was remitted to the file of AO for certain verification. It was held that in such a factual position, penalty doesn’t survive.

[ACIT vs. Shir Omprakash Ramanlal Chaudhary – ITA No.1773/Ahd/2012]