Tribunal relied on the Bombay High Court decision in case of CIT v. Samson Perinchery ( 201) 392 ITR 4) (Bom) (HC) wherein it was held that the order imposing penalty has to be made only on the ground for which the penalty proceedings have been initiated. It cannot be on a ground of which the assessee has no notice. Tribunal held that Pune Benches of the Tribunal have been consistently holding that recording of satisfaction on one ground and levying penalty on another would make the penalty order bad in law. Accordingly, Tribunal deleted the penalty.

In another year under appeal, AO initiated penalty for concealment of income under S. 271(1)(c) of the Act. The penalty was levied as in the original return of income the assessee had claimed certain expenditure and payment of commission subsequently, they were found to be bogus. However, the assessee contented that it is a case of furnishing of inaccurate particulars of income and not concealment of income.

Tribunal held that where the assessee has completely withheld information about the income generated and there is no mention of such income either in the books or the return of income, such suppression of income would fall within the expression ‘concealment of income’. It is not so in the present case. The assessee has made wrongful claim of bogus expenditure, therefore, it would be a case of furnishing of inaccurate particulars of income. Thus, the AO while recording satisfaction for levying penalty has erred in invoking wrong limb of S. 271(1)(c). Consequently, the penalty has been levied under wrong charge for concealment of income. It is a case of furnishing of inaccurate particulars of income and not concealment of income. Accordingly, the Tribunal deleted the penalty.