Vague penalty notice under tax law invalid when it fails to specify concealment or inaccurate particulars.

Penalty notices under section 274 read with section 271(1)(c) were held invalid because they did not strike off the inapplicable limb and failed to specify whether the allegation was concealment of income or furnishing inaccurate particulars. The vague, omnibus notice was treated as non-application of mind and, applying strict construction of penal provisions, ambiguity was resolved in favour of the assessee. Delay in filing the cross objections was condoned for sufficient cause under section 253(5), and the cross objections were entertained and allowed. Once the penalty was set aside, the revenue appeals did not survive.

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Issues: Whether the penalty notices issued under section 274 for levy of penalty under section 271(1)(c) were invalid for not striking off the inapplicable limb, and whether the cross objections were liable to be entertained despite delay.

Analysis: The delay in filing the cross objections was condoned on the basis of sufficient cause under section 253(5) of the Income-tax Act, 1961. On merits, the penalty notices did not specify whether the proposed penalty was for concealment of income or for furnishing inaccurate particulars of income. The charge was therefore vague, and the assessee was not informed of the exact basis of the penalty proceedings. Such an omnibus notice reflected non-application of mind and attracted the settled principle that a penal provision must be construed strictly and ambiguity must be resolved in favour of the assessee.

Conclusion: The penalty notices were held invalid, the penalty was quashed, and the cross objections were allowed.

Final Conclusion: The penalty could not be sustained because the statutory notice failed to specify the exact limb of the charge, and the revenue appeals did not survive once the penalty was set aside.

Ratio Decidendi: A penalty notice under section 274 read with section 271(1)(c) is vitiated if it does not clearly specify the particular charge, namely concealment of income or furnishing inaccurate particulars of income.

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