Penalty notices must specify the exact charge; full disclosure and an unsuccessful tax claim do not equal inaccurate particulars.

Penalty under section 271(1)(c) depends on a clear and consistent notice specifying whether concealment of income or furnishing inaccurate particulars is alleged; a notice that leaves the wrong limb intact shows non-application of mind and creates a jurisdictional defect, so the penalty cannot stand. On the facts disclosed, the assessee had fully disclosed the sale agreement and relevant material, and the dispute concerned only the year of taxability. An unsustainable legal claim made on complete disclosure does not, by itself, amount to furnishing inaccurate particulars. The penalty was therefore unsustainable.

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Issues: (i) whether penalty under section 271(1)(c) could survive when the notice did not clearly specify the precise limb invoked and the charge at initiation differed from the charge ultimately pressed; (ii) whether, on the facts disclosed in the return and assessment proceedings, the assessee's treatment of capital gains on receipt basis amounted to furnishing inaccurate particulars of income.

Issue (i): whether penalty under section 271(1)(c) could survive when the notice did not clearly specify the precise limb invoked and the charge at initiation differed from the charge ultimately pressed

Analysis: The penalty provision contains two distinct limbs, namely concealment of particulars of income and furnishing inaccurate particulars of income, and the assessee must be put to notice of the exact charge. A printed notice that leaves the inapplicable portion intact reflects non-application of mind and fails to convey the basis on which penalty is proposed. Where penalty is initiated on one limb but sustained on another, the defect is jurisdictional and the penalty cannot stand.

Conclusion: The penalty proceedings were vitiated because the notice and the imposed penalty did not clearly and consistently identify the same statutory limb.

Issue (ii): whether, on the facts disclosed in the return and assessment proceedings, the assessee's treatment of capital gains on receipt basis amounted to furnishing inaccurate particulars of income

Analysis: The assessee had disclosed the agreement for sale and the relevant factual matrix in the original scrutiny proceedings. The dispute was only about the year in which the capital gains became taxable, not about suppression of primary facts. A claim that is ultimately found unsustainable in law does not, by itself, amount to furnishing inaccurate particulars when the underlying facts are fully disclosed.

Conclusion: The assessee did not furnish inaccurate particulars of income merely by adopting a different, though ultimately unsuccessful, view on year of taxability.

Final Conclusion: The penalty could not be sustained and the assessee's appeal succeeded.

Ratio Decidendi: Penalty under section 271(1)(c) cannot be sustained unless the exact charge is clearly specified and proved, and a mere unsustainable legal claim made on full disclosure of facts does not amount to furnishing inaccurate particulars of income.

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