Penalty under section 271(1)(c) fails where initiation is for concealment but levy is for inaccurate particulars.

Penalty under section 271(1)(c) was held unsustainable because the Assessing Officer recorded initiation on concealment of income, but the penalty order was ultimately based on furnishing inaccurate particulars. The material shift between the recorded satisfaction and the ground of levy broke the required consistency in the basis of the penalty, and the default could not be changed from concealment to inaccurate particulars at the penalty stage. On that footing, the penalty was deleted and the revenue's challenge failed.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable when the Assessing Officer initiated proceedings on concealment of income but imposed the penalty on the basis of furnishing inaccurate particulars of income.

Analysis: The assessment order recorded satisfaction for concealment of particulars of income in relation to long-term capital gains, while the penalty order proceeded on the distinct footing of furnishing inaccurate particulars of income. The basis of initiation and the basis of levy thus did not remain consistent. Penalty under section 271(1)(c) depends upon a clear and continuing satisfaction as to the precise nature of the default, and a material shift in that foundation renders the penalty unsustainable.

Conclusion: The penalty was rightly deleted and the revenue's challenge failed.

Ratio Decidendi: Penalty under section 271(1)(c) cannot be sustained where the recorded satisfaction and the ultimate ground of levy do not match, and the nature of the default is shifted from concealment to furnishing inaccurate particulars.

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