Penalty u/s 271(1)(c) Not Leviable on Estimated Addition of Profit Element in Bogus Purchases: ITAT Mumbai

P Cube Construction Private Limited Vs DCIT (ITAT Mumbai) The ITAT Mumbai allowed the assessee’s appeal & deleted penalty levied u/s 271(1)(c) for AY 2011-12, holding that penalty cannot survive where addition is sustained purely on estimation basis. In the quantum proceedings, the AO had treated purchases as bogus & made addition of ₹83.98 lakh. The CIT(A) restricted the addition to 12.5%, sustaining only ₹10.49 lakh as estimated profit element, which was later upheld by ITAT. Based on this sustained addition, the AO levied penalty at 300% of tax sought to be evaded. The Tribuna...