Good question. The answer is that the judges must deduct the points.
In boxing or MMA that means that the penalized fighter now has 9 points to work with in the round. If a judge didn't agree with the call, s/he might be tempted to give a close round to the other fighter making the round 9-9 instead of 10-8 in favor of the non-penalized fighter, but the point deduction is there either way.
Here's a bit of the wording from the Nevada State AC (the question isn't addressed directly, but you can get the jist from statements like this):
1. If an unarmed combatant fouls his opponent during a contest or exhibition or commits any other infraction, the referee may penalize him by deducting points from his score, whether or not the foul or infraction was intentional. Except as otherwise provided in subsection 2 of NAC 467.698, the referee may determine the number of points to be deducted in each instance and shall base his determination on the severity of the foul or infraction and its effect upon the opponent.
2. When the referee determines that it is necessary to deduct a point or points because of a foul or infraction, he shall warn the offender of the penalty to be assessed.
3. The referee shall, as soon as is practical after the foul, notify the judges and both unarmed combatants of the number of points, if any, to be deducted from the score of the offender.
4. Any point or points to be deducted for any foul or infraction must be deducted in the round in which the foul or infraction occurred, and may not be deducted from the score of any subsequent round