Penalty under section 271(1)(c) fails when the initiation charge and final levy are based on different limbs.

Penalty under section 271(1)(c) is unsustainable where the Assessing Officer records satisfaction for concealment of income but ultimately levies penalty for furnishing inaccurate particulars. The recorded charge at initiation must match the charge adopted in the penalty order, and a shift between the two limbs creates a fundamental ambiguity that vitiates the proceedings. On that basis, the penalty was set aside in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable when the charge recorded at initiation was concealment of income but the penalty was finally imposed for furnishing inaccurate particulars.

Analysis: The assessment order showed that the Assessing Officer initiated penalty on one limb of section 271(1)(c), namely concealment of income, whereas the penalty order proceeded on the other limb, namely furnishing inaccurate particulars. The charge at the stage of recording satisfaction and the charge at the stage of levy were not consistent. Since the basis of initiation and the basis of imposition must match, the ambiguity in the charge went to the root of the penalty proceedings.

Conclusion: The penalty under section 271(1)(c) was held unsustainable and was set aside, in favour of the assessee.

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