The ITAT held that penalty under section 271(1)(c) could not be...

The ITAT held that penalty under section 271(1)(c) could not be sustained where the assessing officer did not dispute the genuineness of purchases or the corresponding sales and quantities recorded in the books. The addition based on an estimated gross profit rate was reduced substantially by the Tribunal from 12.5% to 2%. Given that the gross profit was estimated on an adhoc basis without any deliberate concealment or misreporting, the imposition of penalty was unwarranted. Consequently, the penalty confirmed by the CIT(A) was deleted, and the appeal filed by the assessee was allowed.