Penalty under section 271(1)(c) not leviable on estimated bogus purchase addition; concealment penalty deleted.

Penalty under section 271(1)(c) is not exigible where the quantum addition for alleged bogus purchases is sustained only on an estimated or ad hoc basis. The article notes that the disputed purchases were restricted to 3% in quantum proceedings, and the penalty was levied on that reduced addition. Applying the settled principle that estimated additions do not support concealment penalty, 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 quantum addition, in respect of alleged bogus purchases, was sustained only on an estimated basis at 3%.

Analysis: The addition in quantum proceedings had been restricted to 3% of the disputed purchases. The penalty had been levied with reference to the addition so sustained. In income-tax proceedings, penalty under section 271(1)(c) is not exigible where the addition is made or sustained on estimation or ad hoc basis, and the same principle governed the present case.

Conclusion: Penalty under section 271(1)(c) was not leviable on the estimated addition, and the penalty sustained by the lower authorities was deleted in favour of the assessee.

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