JUDGMENT judgment of court was delivered by L. Narasimha Reddy J.-This case presents occasion to deal with certain important aspects in context of initiation of proceedings under section 271(1)(c) of Income-tax Act, 1961 (for short "the Act"). respondent is assessee involved in activity of construction. For assessment year 1995-96, returns were submitted on October 30, 1995, showing income of Rs. 2,40,180. Before order of assessment was passed, survey was conducted under section 143A of Act on December 8, 1995. One of aspects noticed during course of survey was that respondent submitted application to Life Insurance Corporation in year 1993 for sanction of loan and had projected income through activity of construction at Rs. 23.68 lakhs for three financial years between 1993 and 1995. However, income for three financial years was shown only at Rs. 16,03,364 in respective returns. order of assessment was passed by Assessing Officer on March 15, 1996, taking total income at Rs. 10,08,200. same has become final and income-tax imposed thereon was paid. Assessing Officer initiated penalty proceedings under section 271(1)(c) of Act against respondent. On receipt of show-cause notice, respondent submitted explanation. It was mentioned that in course of survey, certain additions were accepted with view to purchase peace and that in order of assessment, no mention was made about initiation of proceedings under section 271(1)(c) of Act. explanation was not accepted and Assessing Officer passed order dated September 30, 1996, imposing penalty of Rs. 3,04,000. respondent carried matter in appeal before Commissioner of Income-tax (Appeals). appeal was allowed through order dated January 27, 1997. Aggrieved by that, Department filed ITA No. 620/H/1997, before Visakhapatnam Bench of Income-tax Appellate Tribunal. appeal was dismissed on October 10, 2002. Hence, this further appeal under section 260A of Act, by Revenue. Sri J. V. Prasad, learned standing counsel for appellant, submits that Commissioner of Income-tax (Appeals) as well as Tribunal took view that (a) if facts and figures noticed during course of survey are accepted by assessee, no occasion would arise for levying penalty, and (b) absence of endorsement or observation in order of assessment for initiation of proceedings under section 271(1)(c) of Act would disable Assessing Officer from taking any steps in that direction; is contrary to law as laid down by Supreme Court in CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC) and other decisions rendered earlier thereto. It is also pleaded that mere fact that assessee stated that he paid tax or accepted figures to purchase peace, does not absolve him from liability to be levied penalty and that orders passed by Commissioner of Income-tax (Appeals) and Tribunal cannot be sustained in law. Sri Y. Ratnakar, learned senior counsel, on other hand, submits that very basis for conducting survey was discrepancy between figures projected in loan application filed by respondent, on one hand and actual income derived for corresponding period, on other hand. He submits that basis for adding income was absence of vouchers for sundry purchases such as sand and other construction material, and with view to avoid further complication in matter, figure suggested by Assessing Officer was accepted. He submits that assuming that acceptance of such figures and payment of tax can be treated as suppression or furnishing of incorrect information, initiation of proceedings under section 271(1)(c) of Act was untenable since Assessing Officer did not record any satisfaction in order of assessment as to initiation of proceedings under that provision. He submits that language employed in sub-section (1B) of section 271 leaves no doubt at all in this behalf. He placed reliance upon judgment of this court in Chennakesava Pharmaceuticals v. CIT [2012] 349 ITR 196 (AP). levy of penalty is one of deterrents provided for under Act to ensure that no assessee furnishes incorrect and wrong information or facts and figures in returns. If it is noticed that assessee has furnished incorrect information or figures, not only tax would be levied on income ascertained after verification, but also penalty can be levied under section 271(1)(c) of Act. relevant parts of section 271 reads as under: 271. (1) If Assessing Officer or Commissioner (Appeals) in course of any Assessing Officer or Commissioner (Appeals) in course of any proceedings under this Act, is satisfied that any person... (b) has failed to comply with notice under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with direction issued under sub-section (2A) of section 142, or (c) has concealed particulars of his income or furnished inaccurate particulars or such income, or (d) has concealed particulars of fringe benefits or furnished inaccurate particulars of such fringe benefits, he may direct that such person shall pay by way of penalty,-... (ii) in cases referred to in clause (b), in addition to tax, if any, payable by him, sum of one thousand rupees for each such failure; (iii) in cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, sum which shall not be less than, but which shall not exceed three times, amount of tax sought to be evaded by reason of concealment of particulars of his income or fringe benefits or furnishing of inaccurate particulars of such income or fringe benefits... (1B) Where any amount is added or disallowed in computing total income or loss of assessee in any order of assessment or reassessment and said order contains direction for initiation of penalty proceedings under clause (c) of sub-section (1), such order of assessment or reassessment shall be deemed to constitute satisfaction of Assessing Officer for initiation of penalty proceedings under said clause (c)." Obviously because, steps taken under section 271 of Act visit assessee with penal consequences, courts insist that Department must establish element of deliberate step on part of assessee as to concealment of information or furnishing of incorrect facts as distinguished from inadvertent omission or honest misunderstanding of law. It is to be noted that Department need not establish mens rea on part of assessee. Sub-section (1B) was inserted in section 271 of Act to effect that it is not necessary that Assessing Officer must record reasons. That would take away necessity to indicate mens rea. In Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC), Supreme Court held that it is not necessary to establish mens rea on part of assessee in context of levying penalty. Though extensive arguments are advanced as to absence of mens rea or deliberate intention on part of assessee in furnishing certain facts and figures and acceptance of those indicated during survey, we are not inclined to deal with same; particularly when this is not forum or stage. principal contention is about legality of proceedings initiated under section 271(1)(c) of Act. endeavour is only to demonstrate that otherwise innocent mentioning of figures, which were not accepted by Assessing Officer, cannot be treated as act of concealment or furnishing of inaccurate particulars. From point of view of assessee, particulars may be accurate. If Assessing Officer did not believe same, assessee has two options before him. first is to make attempt to convince Assessing Officer by placing relevant material. second is to accept view point of Assessing Officer, to terminate proceedings at earliest. Even that aspect does not detain us further in instant case. One of important grounds that appealed to Commissioner of Income-tax (Appeals) as well as Tribunal was that there was no endorsement in order of assessment dated September 30, 1996, to effect that penalty proceedings under section 271(1)(c) of Act would be initiated. effect of failure to mention that was discussed with reference to decided cases and very provision of law. Basically section 271(1) itself indicates that satisfaction or decision to initiate proceedings must arise in course of proceedings. Added to that, sub-section (1B) of section 271 of Act mandates that intention or satisfaction to initiate proceedings must be evident from order of assessment itself, meaning thereby that such satisfaction need not be supported with other reasons. In Chennakesava's case (supra), this court held that absence of any mention in order of assessment that proceedings under section 271(1)(c) would be initiated makes initiation of such proceedings, untenable. Heavy reliance is placed upon recent judgment of Supreme Court in MAK Data P. Ltd. v. CIT [2013] 358 ITR 593 (SC). perusal of same discloses that assessee was not complaining of absence of such endorsement. He was insisting that satisfaction was not to effect that there was concealment of income or furnishing of inaccurate information. relevant portion reads as follows (page 596): "The Department initiated penalty proceedings for concealment of income and not furnishing true particulars of its income under section 271(1)(c) of Income-tax Act. During course of hearing, assessee contended that penalty proceedings are not maintainable on ground that Assessing Officer had not recorded his satisfaction to effect that there has been concealment of income/furnishing of inaccurate particulars of income by assessee and that surrender of income was conditional surrender before any investigation in matter." Their Lordships extracted text of endorsement made by Assessing Officer to effect that he is satisfied for initiation of proceedings under section 271(1)(c) of Act. It was pointed out that such satisfaction need not be in any particular form. relevant portion reads as under (pages 598-99): "The Assessing Officer, in our view, has recorded categorical finding that he was satisfied that assessee had concealed true particulars of income and is liable for penalty proceedings under section 271 read with section 274 of Income-tax Act, 1961. Assessing Officer has to satisfy whether penalty proceedings be initiated or not during course of assessment proceedings and Assessing Officer is not required to record his satisfaction in particular manner or reduce it into writing." Much emphasis is laid on last words, viz., "or reduce it into writing" and asserted that satisfaction need not be in writing at all. However, they must be read in context of entire sentence, and not in isolation. If so done, conclusion would be that nature of satisfaction need not be in writing, though factum of satisfaction must be in writing. Tribunal has taken correct view of matter and we are not inclined to interfere with same. Hence, I. T. T. A. is dismissed. There shall be no order as to costs. Miscellaneous petitions, if any, shall stand closed. *** Commissioner of Income-tax v. Lotus Constructions