Estimated addition in bogus purchase cases does not by itself justify concealment penalty under the Income-tax Act.

Penalty under section 271(1)(c) was held not leviable where the trading addition relating to alleged bogus purchases was ultimately sustained only on an estimated gross profit basis. The appellate adjustment replaced the original addition with an estimated profit component, and the retention of penalty on such estimated income did not establish concealment or furnishing of inaccurate particulars with the certainty required for penalty proceedings. The penalty was therefore directed to be 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 was ultimately sustained only on an estimated basis in relation to alleged bogus purchases.

Analysis: The assessment arose from an addition made on account of alleged bogus purchases. In appellate proceedings, the trading addition was not accepted in the original form and was recomputed by applying an estimated gross profit rate, thereby reducing the addition to an estimated profit component. The penalty was sought to be sustained on the additions so retained. Where the addition itself rests on estimation, the basis for imposing concealment penalty is not established with the same certainty as in a case of a definite concealment or furnishing of inaccurate particulars.

Conclusion: Penalty under section 271(1)(c) was not leviable and was directed to be deleted, in favour of the assessee.

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