Penalty on estimated income under section 270A cannot stand where property valuation alone drove the addition.

Penalty under section 270A was held not leviable where the addition arose only from a valuation estimate applied to property purchased below guideline value. The under-reported income was computed by comparing the declared sale consideration with the DVO's fair market value estimate, without independent material showing that the assessees actually paid more than what was recorded in the sale deed. Because the income was determined on estimate and the relevant facts were otherwise disclosed, the exclusion in section 270A(6) applied. The ITAT upheld deletion of the penalty, finding no concealment or actual under-reporting apart from the deemed addition.

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Issues: Whether penalty under section 270A of the Income-tax Act, 1961 could be sustained where the addition arose only from a valuation estimate applied under the deeming provision for purchase of property below guideline value.

Analysis: The addition was made by comparing the declared sale consideration with the District Valuation Officer's estimate of fair market value, without any independent material showing that the assessees had actually paid more than the amount recorded in the sale deed. On the facts, the under-reported income was determined only on the basis of estimation. The statutory exclusion in section 270A(6) applied to income determined on estimate where the necessary facts were otherwise disclosed, and the record did not establish concealment or actual under-reporting apart from the deemed addition.

Conclusion: Penalty under section 270A was not leviable, and the deletion of penalty was upheld in favour of the assessees.

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