Section 271(1)(c) Penalty Not Sustainable on Estimated Income Additions: Bombay HC

PCIT Vs Colo Colour Pvt. Ltd.  (Bombay High Court) The Bombay High Court has dismissed a revenue appeal, upholding the deletion of a penalty imposed on Colo Colour Pvt. Ltd. under Section 271(1)(c) of the Income Tax Act, 1961. The dispute arose from the assessment year 2011-12, where the assessee’s re-assessment was completed with an addition of Rs. 7,40,776 for alleged bogus purchases and a further Rs. 59,262 for commission. The assessee, a photo studio operator, had agreed to the additions during the re-assessment to “buy peace of mind” and avoid prolonged litigation, a st...