Estimated additions from alleged bogus purchases do not justify penalty for concealment when no conclusive particulars are proved.

Penalty under section 271(1)(c) was found inapplicable where the appellate authority sustained the addition only to the extent of 12.5% of alleged bogus purchases on an estimated basis. The reduced disallowance was treated as an estimate rather than a conclusive finding of concealment or furnishing of inaccurate particulars. On that settled principle, penalty was deleted for both years.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the addition sustained by the appellate authority was restricted to 12.5% of alleged bogus purchases and thus made on an estimated basis.

Analysis: The additions were sustained only to the extent of 12.5% after the original disallowance of 100% of the purchases was reduced. The sustained addition was therefore treated as one made on estimation. In such circumstances, the settled view applied was that penalty under section 271(1)(c) does not arise where the addition is based on estimate rather than a conclusive finding of concealment or inaccurate particulars.

Conclusion: Penalty under section 271(1)(c) was held to be not leviable and the penalties for both years were directed to be deleted.

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