Celtic face a UEFA fine over the display at the club's Champions League meeting with AC Milan which featured images of Scottish historical figure William Wallace and IRA hunger striker Bobby Sands along with a set of lyrics.
The words on the other banners, which were displayed in and around the section housed by the Green Brigade, the 'ultras' section of the Hoops fans, read: 'The terrorist or the dreamer, the savage or the brave, depends whose vote you're trying to catch or whose face you're trying to save'.
The display pertained to the Green Brigade's on-going disgruntlement at the Offensive Behaviour at Football Act which they claim deems "expressions of Irish identity, culture and politics" illegal.
UEFA announced its control and disciplinary body would deal with the case on December 11 after confirming proceedings had been opened for "an incident of a non-sporting nature (illicit banner)".
Ahead of the Scottish Cup fourth-round clash against Hearts at Tynecastle on Sunday, the Celtic boss said: "I quite like going out before the game and soaking up the atmosphere because you never know when you have that opportunity again.
"It is not guaranteed you will play Champions League every year, and my heart sank a little bit I have to say.
"I think there were a lot of other areas of the stadium where the supporters were scratching their heads and trying to understand the reasoning behind it.
"Since then we know the reasons behind it but it certainly wasn't the time or place for a display like that.
"It should have been a celebration rather than people having a grumble about something.
"When I came in here I tried to bring the club together again and I think we have done that, certainly with the performances over the last three or four years, so it is disappointing that some people want to bring cracks to the club.
"I don't know what you can do.
"It is not welcome within the stadium. We understand that they maybe have legitimate complaints over some of the laws brought in but Celtic Park is not the place to bring banners in like that.
"We are a football club at the end of the day, multi-cultural as well, so I think we need to put a stop to it."
The Hoops crashed out of Europe altogether with the 3-0 defeat to Milan but the Northern Irishman, who revealed that midfielder Beram Kayal would be out for six to seven weeks with a broken bone in his foot, tried to put the disappointment into context.
He said: "What is success for us in the Champions League? It is only three times in 14 years (qualified for the last 16) and a lot of managers had a lot more money than me and didn't do it.
"We have to be careful about throwing money at things.
"We have to make sure we have a club that can compete every year in the Champions League.
If we can make the last 16, fantastic, but it takes a lot of money to do that.
"We have qualified and that was the most important thing.
"We will work to get better. We are in a transitional period.
"The team is not better because we lost Gary Hooper, Victor Wanyama and Kelvin Wilson (in the summer).
"If you took Aguero, Yaya Toure and Vincent Kompany out of Man City's team would they be a better team for it? It is similar."
The former Celtic skipper also responded to the criticism of his side's zonal marking at corners which cost two goals against the Rosseneri.
"You look at zonal and you look at man-marking, we do a bit of both," he said.
"It was just players not taking the responsibility for the ball in their area which is one thing that we can't criticise them for.
"For the last 18 months to two years we have defended set-pieces fantastically, we have been so consistent, so that was as disappointing as anything.
"If you look at the first goal, the gap between Georgios Samaras and Virgil van Dijk is far too big.
"I don't know why Sami is outside the post and Virgil seemed to mistime the ball, but it happens."
Lennon, though, believes a trip to Tynecastle is an ideal chance for his side to "bounce back".
"We want to win it," he said. "The best thing the players can do is get back on to the pitch.
"There is a good atmosphere there and anything can happen on the day but I am expecting us to play very strongly and try to prevail."