Penalty notice requirements under section 271(1)(c) raised a referable question of law on concealment penalty procedure.

A question arose whether, in penalty proceedings for concealment, Explanation 1 to section 271(1)(c) had to be separately invoked in the show-cause notice, and whether that issue justified reference under section 256(2) of the Income-tax Act, 1961. The appellate authority and Tribunal had treated separate invocation of Explanation 1 as necessary, but the High Court found that view prima facie incorrect and held that the proposed question required examination. The petition was allowed and the Tribunal was directed to state the case and refer the question of law for the Court's opinion.

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Issues: Whether a question of law arose for reference under section 256(2) of the Income-tax Act, 1961 on the Tribunal's view that penalty for concealment stood vitiated because Explanation 1 to section 271(1)(c) was not separately invoked in the show-cause notice.

Analysis: The record showed concurrent findings of the appellate authority and the Tribunal that separate invocation of Explanation 1 was necessary while considering levy of penalty. The Court found that this view was prima facie incorrect and that the proposed question required examination by the High Court.

Conclusion: The petition was allowed and the Tribunal was directed to state the case and refer the question of law for the opinion of the Court.

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