Concealment penalty not attracted where bogus purchases were assessed only on estimated gross profit and recorded sales were undisturbed.

Penalty for concealment was held not attracted where alleged bogus purchases were accepted only for estimating income by applying a gross profit rate, while the purchases were recorded in the books and the corresponding sales were not rejected. On those facts, the particulars of purchase were not treated as inaccurate in the sense required for section 271(1)(c), and an estimated quantum addition did not justify a penalty for concealment or furnishing inaccurate particulars. The penalty was therefore deleted and the assessee succeeded.

---

---

Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where purchases were treated as bogus only for the purpose of estimating income by applying a gross profit rate and corresponding sales were not disturbed.

Analysis: The additions in quantum had been restricted by applying a gross profit rate on the alleged bogus purchases on an estimated basis. The purchases were reflected in the books and the corresponding sales were not rejected. On these facts, the particulars of purchase were not found to be inaccurate in the sense required for penalty, and estimation of income did not justify concealment penalty.

Conclusion: Penalty under section 271(1)(c) was not sustainable and was deleted.

Final Conclusion: The assessee succeeded, and the penalty levied and sustained below was annulled in both matters.

Ratio Decidendi: Where an addition on account of alleged bogus purchases is sustained only by estimating profit through a gross profit rate, and the purchases and corresponding sales are recorded in the books, penalty for concealment or furnishing of inaccurate particulars is not attracted.

---