Penalty under Section 271(1)(c) fails when initiation and final charge differ, breaking the required consistency of satisfaction.

A penalty under Section 271(1)(c) cannot be sustained where proceedings are initiated on one limb of the charge, such as furnishing inaccurate particulars of income, but the final penalty is imposed on a different limb, such as concealment of income. The statutory requirement is a clear and continuing satisfaction on the specific default, and a change in the basis of penalty breaks the foundation of the proceeding. The penalty was therefore held unsustainable and cancelled.

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Issues: Whether a penalty under Section 271(1)(c) of the Income-tax Act, 1961 is sustainable when the Assessing Officer initiated penalty on the footing of furnishing inaccurate particulars of income but finally imposed it on the ground of concealment of income.

Analysis: The initiation of penalty proceedings must rest on a clear and continuing satisfaction as to the specific default. Where the basis for initiation is one limb of Section 271(1)(c) and the penalty order is ultimately passed on a different limb, the foundation of the penalty changes and the statutory requirement of a consistent satisfaction is not met.

Conclusion: The penalty was held unsustainable and was cancelled.

Final Conclusion: The assessee's penalty liability was set aside because the penalty order did not match the charge on which proceedings had been initiated.

Ratio Decidendi: A penalty under Section 271(1)(c) cannot be sustained where the Assessing Officer initiates proceedings on one specific allegation and imposes penalty on a different and inconsistent allegation.

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