Penalty under section 271(1)(c) fails where full disclosure is made and the notice does not specify the exact charge.

Penalty under section 271(1)(c) was not sustainable where the assessee disclosed the reduction claim from book profit in the return, computation, audit report and accounts, and the revenue failed to show that any particulars furnished were false or incorrect. A mere unsustainable claim, without proof of concealment or inaccurate particulars, did not justify penalty. The penalty proceedings were also vitiated because the section 274 notice in standard form did not specify whether the charge was concealment of income or furnishing of inaccurate particulars. As the two limbs are distinct and the assessee was not clearly informed of the exact allegation, the notice offended natural justice and the penalty could not survive.

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Issues: (i) Whether penalty under section 271(1)(c) was leviable for the assessee's claim of reduction from book profit under clause (vii) of Explanation 1 to section 115JB(2). (ii) Whether the penalty proceedings were invalid because the notice under section 274 did not specify whether the charge was concealment of income or furnishing of inaccurate particulars.

Issue (i): Whether penalty under section 271(1)(c) was leviable for the assessee's claim of reduction from book profit under clause (vii) of Explanation 1 to section 115JB(2).

Analysis: The claim for reduction from book profit was disclosed in the return, computation, audit report, balance sheet and accompanying accounts. The material showed that the assessee had treated itself as a sick industrial company and believed it was entitled to the MAT adjustment. A mere unsustainable claim, without a finding that any particulars furnished were false or incorrect, does not by itself establish concealment or furnishing of inaccurate particulars. The burden remained on the revenue to show how the details supplied were inaccurate, and that burden was not discharged.

Conclusion: Penalty was not leviable on the assessee on this ground, and the deletion of penalty was in favour of the assessee.

Issue (ii): Whether the penalty proceedings were invalid because the notice under section 274 did not specify whether the charge was concealment of income or furnishing of inaccurate particulars.

Analysis: The notice issued in the standard format did not strike off the inapplicable limb and thus did not clearly inform the assessee of the precise charge. The Tribunal applied the settled principle that concealment of income and furnishing of inaccurate particulars are distinct charges, and the assessee must be told which one is invoked so that an effective defence can be made. A vague notice offends natural justice and vitiates the consequential penalty proceedings.

Conclusion: The notice was invalid and the penalty proceedings could not be sustained, in favour of the assessee.

Final Conclusion: The revenue's challenge to deletion of penalty failed, and the penalty order was not sustained either on merits or on the jurisdictional defect in the notice.

Ratio Decidendi: A penalty under section 271(1)(c) cannot survive where the assessee has disclosed all primary facts and the revenue fails to show furnishing of false particulars, and a notice under section 274 must specifically identify the exact limb of the charge invoked.

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