Concealment penalty cannot rest on estimated income enhancement without positive evidence of concealment or bogus

Penalty for concealment was not sustainable where the assessee had disclosed contract receipts and the income addition resulted only from estimation by applying a higher net profit rate. The absence of any finding that a specific expense was fictitious, or any concrete material showing conscious concealment of income, meant section 271(1)(c) could not be invoked merely because the assessed income was enhanced on estimate. On that basis, deletion of the penalty was upheld 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 income was enhanced only by applying a higher profit rate on estimation without positive evidence of concealment or fictitious expenditure.

Analysis: The assessee had disclosed the contract receipts, and the addition arose from the Assessing Officer's estimation of income by adopting a higher net profit rate. No particular expense was shown to be fictitious and no concrete material established conscious concealment of income. In the absence of positive evidence, penalty could not rest merely on an estimated enhancement of income.

Conclusion: Penalty under section 271(1)(c) was not leviable, and the deletion of penalty was upheld in favour of the assessee.

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