Penalty notice must specify the exact charge under Section 271(1)(c), or the penalty fails.

A penalty notice under Section 274 read with Section 271(1)(c) of the Income-tax Act is invalid if it does not specify whether the alleged default is concealment of income or furnishing inaccurate particulars. A vague and ambiguous notice fails to give the assessee a clear charge and prevents an effective defence. On that basis, the defective initiation of penalty proceedings renders the consequential penalty unsustainable.

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Issues: Whether the penalty notice under Section 274 read with Section 271(1)(c) of the Income-tax Act, 1961 was invalid for not specifying whether the proposed penalty was for concealment of particulars of income or for furnishing inaccurate particulars of income, and whether the consequent penalty could be sustained.

Analysis: The notice was found to be vague and ambiguous because it did not clearly indicate the exact limb of Section 271(1)(c) invoked. The absence of a specific charge prevented the assessee from meeting the allegation effectively. Relying on the settled principle that a penalty notice must make the charge clear, the defective initiation of penalty proceedings rendered the subsequent penalty unsustainable.

Conclusion: The penalty notice was invalid, and the penalty imposed under Section 271(1)(c) could not be sustained.

Ratio Decidendi: A penalty under Section 271(1)(c) of the Income-tax Act, 1961 cannot be sustained where the notice under Section 274 does not specify the precise charge of concealment of income or furnishing of inaccurate particulars.

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