Penalty on estimated income deleted where no clear concealment or inaccurate particulars were found.

Penalty under section 271(1)(c) was held unsustainable where the assessee's business activity was accepted and income was computed on estimation under section 44AD based on bank deposits. The estimated addition did not rest on a clear finding of concealed income or furnishing of inaccurate particulars, and penalty could not be imposed merely because income was estimated. The penalty was deleted in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) could be sustained where income was estimated on the basis of bank deposits and business income was assessed on estimation.

Analysis: The assessee's business activity was accepted and income was determined by estimation under section 44AD. On that basis, the addition did not rest on a clear finding of concealed income or furnishing of inaccurate particulars. Penalty under section 271(1)(c) is not attracted merely because income has been estimated.

Conclusion: The penalty was held to be unsustainable and was deleted, in favour of the assessee.

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