Penalty under section 271(1)(c) fails where satisfaction is unclear and the show-cause notice is defective.

Penalty under section 271(1)(c) was deleted because the Assessing Officer had not recorded clear satisfaction on whether concealment of income or furnishing of inaccurate particulars was alleged, and the show-cause notice initiating penalty proceedings was not valid. The recorded satisfaction related only to denial of exemption under section 10(23C)(vi) and did not extend clearly to the other additions. The High Court found no infirmity in the Tribunal's reasoning, upheld deletion of the penalty, and held that no substantial question of law arose.

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Issues: Whether the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 was liable to be deleted for want of proper satisfaction and a valid show-cause notice, and whether any substantial question of law arose from the Tribunal's order.

Analysis: The Tribunal found that the Assessing Officer had not recorded clear satisfaction as to which limb of section 271(1)(c) was attracted, and that the notice initiating penalty proceedings was not proper. It further found that the satisfaction recorded related only to denial of exemption under section 10(23C)(vi) and not to the other additions, and that the penalty order did not clearly establish whether the case was one of concealment of income or furnishing of inaccurate particulars. The High Court found no infirmity in this reasoning.

Conclusion: The deletion of penalty was upheld and no substantial question of law arose.

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