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9. Being aggrieved, the assessee impugned the penalty in appeal before the CIT(A). It was submitted before the CIT(A) that as per satisfaction recorded in the assessment order the AO had initiated penalty proceedings only in respect of unexplained cash of Rs. 34,736. The AO had not initiated penalty proceedings in respect of any of the other additions. Therefore, no penalty under Section 271(1)(c) in respect of addition of Rs. 7.50 lakhs could be levied. As regards discrepancy in cash, the assessee had explained that the balances in the account books were not properly struck. It was explained that the difference had arisen on account of human error because the balance was wrongly taken as per books on 19th Oct., 1994. The search was conducted on 21st Oct., 1994, which was Friday. There were transactions on 21st Oct., 1994 and these would have effect on the cash in hand on 21st Oct., 1994 because 20th Oct., 1994, was a working day. On the basis of documents, it was submitted that the difference was only of Rs. 1,607. This amount being petty, should have been ignored. Accepting the contentions of the assessee, CIT(A) held that no penalty in respect of item of income for which satisfaction was not recorded in the assessment order, can be imposed. Besides, the difference in cash found at the time of search and as recorded in the cash book, stood fully reconciled. Therefore, the CIT(A) cancelled the penalty by recording following finding in paras 3, 4 & 5 of the impugned order :