Penalty U/s 271(1)(c) Deleted – Bogus Purchase Additions Based on Estimation Cannot Trigger Penalty – ITAT Mumbai

Ratnaram Kohlaram Chaudhary Vs ITO (ITAT Mumbai) Penalty u/s 271(1)(c) was imposed in reassessment proceedings where AO treated certain purchases as bogus based on Sales Tax Department information and estimated profit element at 25%/12.5%, which was later reduced by CIT(A) to 6.5%/6%. Tribunal observed that additions were purely on estimated profit basis and not on concrete proof of concealment. Relying on jurisdictional Bombay HC decision in Pr.CIT vs Colo Colour Pvt Ltd and settled law, ITAT held that when income is determined on ad-hoc estimation or guesswork, it cannot automatically lead t...