Income Tax Penalty Cannot Be Levied on Estimated Additions for Alleged Bogus Purchases: Bombay HC

The Bombay High Court has ruled that income tax penalties cannot be levied when additions are made solely on an estimated basis in cases of alleged bogus purchases. In the case of Colo Colour Pvt. Ltd., the Assessing Officer had added a profit element on alleged bogus purchases without concrete evidence of concealment. The court observed that penalties under Section 271(1)(c) require proof of conscious concealment or deliberate furnishing of inaccurate particulars, which was absent in this case. The ruling reinforces that estimated additions without substantial evidence do not justify penalty imposition.