Penalty for estimated additions under section 271(1)(c) cannot survive when the income is based on guesswork.

Penalty for concealment or furnishing inaccurate particulars under section 271(1)(c) was held not sustainable where the addition arose only from estimation of the gross profit element in unproved purchases. The court treated the issue as covered by its earlier view that penalty is not exigible when the income addition rests on pure estimation or guesswork, rather than proved concealment. On that basis, the revenue's challenge did not raise a substantial question of law, and the penalty issue was answered against the revenue and in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could be sustained where the addition was made purely on an estimated basis from unproved purchases.

Analysis: The addition to income was made by estimating the gross profit element in unproved purchases and was not disputed by the assessee. The Court noted that the issue stood covered by its earlier decision holding that penalty under section 271(1)(c) is not exigible where the addition is sustained purely on estimation or pure guess work. Since the revenue's challenge rested on the same footing, no substantial question of law arose.

Conclusion: Penalty under section 271(1)(c) could not be imposed on the estimated addition, and the issue was answered against the revenue and in favour of the assessee.

Final Conclusion: The revenue appeal failed and was dismissed, with no order as to costs.

Ratio Decidendi: Penalty for concealment or furnishing inaccurate particulars cannot be imposed where the addition itself is sustained only on estimation or guess work.

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