Penalty charge must match recorded satisfaction; adding concealment beyond the original initiation invalidates section 271(1)(c) proceedings.

Penalty under section 271(1)(c) of the Income-tax Act was held unsustainable where the Assessing Officer's recorded satisfaction at initiation referred only to furnishing inaccurate particulars, but the penalty order also invoked concealment. The legal principle applied was that penalty proceedings must remain confined to the specific charge for which satisfaction was recorded and notice was issued. Because the final penalty order travelled beyond the original basis of initiation by adding a different ground, the proceedings were held to suffer from legal infirmity and were set aside, with consequential relief to the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was valid where the satisfaction recorded at the assessment stage referred to furnishing of inaccurate particulars, but the penalty order invoked both furnishing of inaccurate particulars and concealment.

Analysis: The penalty proceedings must be founded on the specific charge for which the Assessing Officer records satisfaction at the time of initiation. Where the assessment order initiates penalty only for furnishing inaccurate particulars, the penalty order cannot travel beyond that charge by additionally invoking concealment. An inconsistency between the recorded satisfaction and the eventual penalty charge creates legal infirmity and vitiates the penalty proceedings.

Conclusion: The penalty order was held to be legally unsustainable and void, and the consequential proceedings were also vitiated.

Final Conclusion: The impugned penalty order was set aside and the assessee obtained relief on the legal challenge.

Ratio Decidendi: Penalty under section 271(1)(c) of the Income-tax Act, 1961 can be imposed only on the precise charge for which satisfaction was recorded and notice was issued; it cannot be sustained on an additional or different ground not forming part of the original initiation.

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