Penalty for estimated disallowance under Section 271(1)(c) was deleted because concealment could not be precisely quantified.

Penalty under Section 271(1)(c) was held unsustainable where the underlying addition was made on an ad hoc and estimated basis. The reasoning was that concealment or furnishing of inaccurate particulars could not be precisely quantified when the disallowance itself rested on estimation, and the settled view applied by the Tribunal was that such a penalty does not survive on an estimated addition. The penalty was therefore directed to be deleted.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the underlying disallowance was made on an ad hoc and estimated basis.

Analysis: The penalty was founded on a disallowance that had been partly sustained only on estimate. In such a situation, the alleged concealment or furnishing of inaccurate particulars was not capable of precise quantification. The settled legal position applied was that penalty under Section 271(1)(c) does not survive where the addition itself rests on estimation, including the view taken by jurisdictional and other High Courts.

Conclusion: The penalty was not sustainable and was directed to be deleted.

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