Recorded satisfaction for penalty initiation is mandatory; routine penalty notes cannot validate section 271(1)(c) proceedings.

Penalty proceedings under section 271(1)(c) require the Assessing Officer to form and record satisfaction during the assessment proceedings that income was concealed or inaccurate particulars were furnished. A routine note that penalty is initiated separately is not enough to satisfy this jurisdictional . The relevant examination is confined to the original assessment orders that triggered the penalty, and later appellate or set-aside proceedings cannot cure a defective initiation. On the assessment orders reviewed, no clear recorded finding supported concealment or furnishing of inaccurate particulars, so the penalty initiation was invalid and the penalties could not be sustained.

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Issues: Whether the penalties under section 271(1)(c) were sustainable when the assessment orders did not record the Assessing Officer's satisfaction that the assessee had concealed income or furnished inaccurate particulars of income.

Analysis: The requirement to form and record satisfaction during the assessment proceedings is a jurisdictional condition for valid initiation of penalty proceedings. Mere use of a routine note that penalty proceedings are initiated separately does not, by itself, establish the statutory satisfaction. The relevant inquiry is confined to the original assessment orders that initiated the penalty, and subsequent appellate or set-aside proceedings cannot cure a defect in the original initiation. On the assessment orders examined, no clear reason or recorded finding showed why penalty was warranted for concealment or furnishing inaccurate particulars.

Conclusion: The initiation of penalty proceedings was invalid and the penalties under section 271(1)(c) could not be sustained.

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