It's a bit hard to guess what the schemas of the two tables in the question are, but we can make some guesses and test code against those guesses.
Semi-plausible schemas
CREATE TEMP TABLE sc1pen
(
    action_month   INTEGER NOT NULL,
    action_year    INTEGER NOT NULL,
    unidentified_1 INTEGER NOT NULL,
    emp_num        INTEGER NOT NULL,
    penalty_action INTEGER NOT NULL,
    penalty_string VARCHAR(30) NOT NULL,
    unidentified_2 INTEGER NOT NULL,
    unidentified_3 INTEGER NOT NULL
);
CREATE TEMP TABLE sc2pen
(
    action_month   INTEGER NOT NULL,
    action_year    INTEGER NOT NULL,
    unidentified_1 INTEGER NOT NULL,
    emp_num        INTEGER NOT NULL,
    penalty_action INTEGER NOT NULL,
    penalty_string VARCHAR(30) NOT NULL,
    penalty_reason VARCHAR(30) NOT NULL,
    unidentified_2 INTEGER NOT NULL,
    unidentified_3 INTEGER NOT NULL,
    sal_year       INTEGER NOT NULL,
    sal_month      INTEGER NOT NULL,
    penalty_type   INTEGER NOT NULL,
    pay_type       INTEGER NOT NULL
);
Translation of INSERT statement
This is a translation of the INSERT statement from the question.
INSERT INTO sc1pen 
    SELECT action_month, action_year, 200 AS unidentified_1, emp_num, penalty_action,
           'APPLY ' || penalty_reason || ' day ' AS penalty_string,
           0 AS unidentified_2, 0 AS unidentified_3
      FROM sc2pen
     WHERE sal_year = 2016 AND sal_month = 4 AND penalty_type = 1 AND pay_type = 0;
Since I was using a command-line tool and not embedded SQL or similar, I had to replace the question marks with values — 2016 for the sal_year and 4 for the sal_month.
Possible MERGE statement
MERGE INTO sc1pen AS dst
    USING (
        SELECT action_month, action_year, 200 AS unidentified_1, emp_num, penalty_action,
               'APPLY ' || penalty_reason || ' day ' AS penalty_string,
               0 AS unidentified_2, 0 AS unidentified_3
          FROM sc2pen
         WHERE sal_year = 2016 AND sal_month = 4 AND penalty_type = 1 AND pay_type = 0
    ) AS src
    ON dst.action_month = src.action_month AND
       dst.action_year = src.action_year AND
       dst.emp_num = src.emp_num
    WHEN NOT MATCHED THEN INSERT VALUES(src.action_month, src.action_year,
                src.unidentified_1, src.emp_num, src.penalty_action,
                src.penalty_string, src.unidentified_2, src.unidentified_3)
    ;
This is mostly 'read the manual' on the MERGE statement.
The ON clause seems semi-plausible; since there's no identification of the primary keys in the tables, we have to guess what the joining conditions should be.