Penalty on re-estimated profits not automatic; mere quantum addition does not by itself justify concealment penalty.

Penalty under section 271(1)(c) was considered in the context of an income addition arising from re-estimation of profits. The text treats the dispute as one of subjective profit estimation rather than a case where an addition automatically justified concealment penalty, and applies the principle that every disallowance or quantum addition does not by itself establish furnishing of inaccurate particulars. On that basis, the penalty was deleted and the matter was decided in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the addition arose from re-estimation of profits and the assessee was held to have furnished inaccurate particulars of income.

Analysis: The penalty was founded on a difference in business income after re-estimation of the profit element in the turnover. The issue was treated as a subjective dispute relating to estimation of profits, and not as a case of automatic penalty merely because a quantum addition had been made. Reliance was placed on the principle that every disallowance or addition does not, by itself, justify penalty under section 271(1)(c).

Conclusion: The penalty was deleted and the issue was decided in favour of the assessee.

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