Estimated trading addition does not by itself justify concealment penalty absent proof of deliberate inaccurate particulars.

Penalty for concealment was not leviable where the trading addition arose only from estimation after rejection of the books of account. The Revenue had not shown any positive material proving deliberate concealment of income or furnishing of inaccurate particulars, and the difference between returned and assessed gross profit was treated as an estimated figure rather than automatic concealment. On that basis, cancellation of the penalty was upheld.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the trading addition was made merely on estimate after rejection of the books of account.

Analysis: The assessment of gross profit was based on estimation after the book results were rejected. The trading addition was a matter of estimate and the Revenue did not bring any positive material to show deliberate concealment of income or furnishing of inaccurate particulars. In such a case, the difference between the assessed figure and the returned figure represented a matter of estimate and not automatic concealment. The authorities relied on the settled principle that penalty is not attracted merely because income is assessed on an estimated basis.

Conclusion: Penalty under section 271(1)(c) was not leviable on the estimated gross profit addition and the cancellation of penalty was upheld.

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