Defective penalty notice under income-tax law rendered section 271(1)(c) proceedings unsustainable for lack of specific charge.

Penalty under section 271(1)(c) was held unsustainable where the section 274 show-cause notice did not specify whether the charge was concealment of income or furnishing inaccurate particulars of income. Because the notice alleged both limbs without striking off the inapplicable one, the assessee was not given clear notice of the exact basis of the proposed penalty. That defect was treated as going to the root of the proceedings and rendering them legally invalid, so the penalty was cancelled.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable when the show-cause notice under section 274 did not specify whether the proceedings were initiated for concealment of income or for furnishing inaccurate particulars of income.

Analysis: The notice alleged both concealment and furnishing of inaccurate particulars without striking off the inapplicable charge. The omission left the assessee without clear notice of the exact limb under which penalty was proposed, and the penalty proceedings were therefore found to be legally defective. The defect was treated as going to the root of the matter and rendering the penalty proceedings unsustainable.

Conclusion: The penalty was held to be not leviable and was cancelled, resulting in success for the assessee.

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