Estimated income addition cannot sustain concealment penalty where no direct evidence of concealment exists.

Penalty under section 271(1)(c) was held unsustainable where the quantum addition rested only on estimation of profit from turnover and not on direct material showing concealment. The Tribunal noted that the underlying disallowance had itself been modified to an estimated profit rate, and applied the principle that concealment penalty is not exigible when income is determined merely by estimation. The penalty was 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 in the quantum proceedings was sustained only on an estimate basis.

Analysis: The assessment disallowance was not upheld on the basis of any direct material establishing concealment, but on an estimated percentage of turnover. The Tribunal noted that the quantum addition itself had been modified to an estimated profit rate, and relied on judicial authority holding that penalty for concealment is not exigible where income is determined merely by estimation.

Conclusion: Penalty under section 271(1)(c) was not sustainable on the estimated addition and was deleted in favour of the assessee.

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