Vague penalty notice under income-tax law cannot sustain proceedings when the exact charge is not specified.

A penalty notice for concealment under the Income-tax Act must clearly specify the exact charge, and the inapplicable limb should be struck off. Where the notice remains vague on whether the allegation is concealment of income or furnishing inaccurate particulars, the assessee is not given a proper opportunity to respond. If the penalty order also proceeds on both limbs, the uncertainty goes to the root of initiation and vitiates the proceedings. On this principle, an ? invalid notice cannot sustain a penalty under section 271(1)(c) read with section 274.

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Issues: Whether penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961 were valid when the notice under section 274 did not specify the exact charge and the inapplicable portion was not struck off.

Analysis: The notice issued to the assessee was in a printed form and the inappropriate words were not deleted, leaving it unclear whether the proposed penalty was for concealment of particulars of income or for furnishing inaccurate particulars of income. The subsequent notice also failed to clarify the precise limb invoked. The penalty order itself proceeded on both limbs, confirming that the Assessing Officer was not certain about the exact charge. In such circumstances, the defect went to the root of the validity of the penalty initiation. The legal position applied was that a penalty notice must clearly indicate the specific charge so that the assessee can respond effectively; a vague notice cannot sustain penalty proceedings.

Conclusion: The penalty initiation was invalid in law and the penalty could not be sustained.

Ratio Decidendi: A penalty notice under section 274 read with section 271(1)(c) of the Income-tax Act, 1961 must specifically state whether the charge is concealment of income or furnishing inaccurate particulars of income; failure to do so vitiates the penalty proceedings.

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