Vague penalty notice fails when the exact charge is not specified, making section 271(1)(c) penalty unsustainable.

Penalty under section 271(1)(c) is unsustainable where the section 274 show-cause notice does not clearly specify whether the allegation is concealment of income or furnishing inaccurate particulars. A penalty notice must unambiguously state the precise charge so the assessee can respond effectively. If the irrelevant portion is not struck off and the notice remains vague, the resulting penalty cannot be sustained. The document notes that such defective notice led to quashing of the penalty in favour of the assessee.

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Issues: Whether the 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 the exact charge.

Analysis: The notice initiating penalty proceedings did not strike off the irrelevant portion and, therefore, did not clearly state whether the assessee was charged with concealment of income or furnishing inaccurate particulars of income. A penalty notice must unmistakably convey the precise allegation so that the assessee can meet the charge. Where the notice is vague and the charge remains uncertain, the penalty imposed pursuant to such notice cannot be sustained.

Conclusion: The penalty was held to be unsustainable and was quashed, which is in favour of the assessee.

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