The assessment was completed with an addition @ 5% or 8% on the alleged bogus purchases and accordingly tax was levied.

The assessee withdrew the appeal filed before the ld. CIT(A).
Accordingly, the penalty u/s 271(1)(C) of the Act was levied on the basis of estimated addition of alleged bogus purchases.

Therefore, admittedly the ld. AO made an addition on estimated basis. It has been decided in a number of judgments that when income of assessee was determined on estimation basis, then no penalty under section 271(1)(c) could be imposed for concealment and furnishing inaccurate particulars. The quantification of the addition is admittedly only an estimate. Needless to mention that it is settled principle of law that penalty is not attracted on estimated additions. In that view of the matter, we find no justification imposing penalty for concealment of income or furnishing of inaccurate particulars of income by the assessee.

We respectfully relied on the order of the co-ordinate bench in case of Fancy Diamonds India Pvt Ltd (supra). We set aside the impugned appeal order and direct to delete the penalty levied U/s 271(1)(c) of the Act.

In the result, both the appeal filed by the assessee bearing ITA No.4203 & 4204/Mum/2022 are allowed.