ITAT deletes penalty on estimated addition

The Agra Bench of the Income Tax Appellate Tribunal held that penalty under Section 270A(9) of the Income-tax Act cannot be sustained where the underlying addition is merely an estimated addition. 

The dispute centred on the validity of a penalty levied for alleged misreporting of income where the quantum addition itself was based on an estimate. 

The Tribunal observed that the quantum addition was based on estimation of profit embedded in alleged non-genuine purchases and, therefore, could not form the basis for a penalty for misreporting of income. Consequently, the penalty of ₹1,10,240 was deleted.