Penalty for ad hoc disallowances deleted where surrender was bona fide and no concealment was established.

The delay in filing the penalty appeal was condoned because the explanation was supported by affidavit and was not shown to be deliberate or mala fide, with a liberal reading of "sufficient cause" applied to advance substantial justice. Penalty under section 271(1)(c) was deleted because the additions were based on ad hoc disallowances, the assessee had been in custody and could not produce supporting records, and the surrender was treated as bona fide to buy peace with the Department. On those facts, concealment or furnishing of inaccurate particulars was not established merely because the assessment involved estimate-based additions.

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Issues: (i) Whether the 47-day delay in filing the penalty appeal should be condoned; (ii) whether penalty under section 271(1)(c) was leviable on ad hoc disallowances where the assessee had made a surrender to buy peace with the Department while being unable to produce supporting evidence during custody.

Issue (i): Whether the 47-day delay in filing the penalty appeal should be condoned.

Analysis: The explanation for delay was supported by an affidavit and the delay was not shown to be deliberate or mala fide. A liberal approach was applied to the expression "sufficient cause", with emphasis on advancing substantial justice and avoiding rejection of a meritorious matter on technical grounds.

Conclusion: The delay was condoned.

Issue (ii): Whether penalty under section 271(1)(c) was leviable on ad hoc disallowances where the assessee had made a surrender to buy peace with the Department while being unable to produce supporting evidence during custody.

Analysis: The additions arose from ad hoc disallowances, and the assessee was found to have been in custody during the relevant period, which prevented production of the required documents. The surrender was treated as a bona fide act to buy peace, and the penalty issue was considered in light of the principle that concealment or furnishing of inaccurate particulars is not established merely because an estimate-based addition is made. The view favouring deletion of penalty was held to be a possible and reasonable one on the facts.

Conclusion: The penalty was not sustainable and was deleted.

Final Conclusion: The penalty appeal succeeded, while the separate quantum appeal was not pursued, leaving the assessee substantially successful overall.

Ratio Decidendi: Penalty under section 271(1)(c) is not justified where the addition is based on ad hoc estimation and the assessee's surrender is shown to be bona fide and made to buy peace, without established concealment or furnishing of inaccurate particulars.

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