Concealment penalty is not ordinarily sustainable where purchase additions are estimated and later modified in quantum proceedings.

Penalty under section 271(1)(c) was considered in a case where the purchase-related addition was made on estimation and later modified in quantum proceedings. The Tribunal applied the principle that concealment penalty is not ordinarily sustainable when income is determined on an estimated basis, especially where there is no separate finding of concealed income. On those facts, the penalty rested only on the estimated addition and was therefore not leviable; it was directed to be deleted in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the addition relating to purchases was made on estimation and later modified in quantum proceedings.

Analysis: The addition arose from a disallowance of purchases made on an estimated basis, and the quantum was further modified in appeal. The Tribunal relied on the principle that where income is determined on estimate, concealment penalty is not ordinarily sustainable. On the facts, the impugned penalty was founded only on the estimated addition and not on a separate finding of concealed income.

Conclusion: Penalty under section 271(1)(c) was not leviable and was directed to be deleted, in favour of the assessee.

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