Vague penalty notice defeats section 271(1)(c) proceedings where the charge is not clearly specified.

A penalty under section 271(1)(c) is not sustainable where the notice under section 274 does not specify whether the charge is concealment of income or furnishing of inaccurate particulars. An omnibus notice that fails to strike off the irrelevant limb is vague and does not validly communicate the basis of proposed penalty, so ambiguity operates in favour of the assessee and vitiates the proceedings.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could be sustained when the notice issued under section 274 did not specify the exact charge, namely concealment of income or furnishing of inaccurate particulars.

Analysis: The addition made in assessment had been accepted, but the penalty could stand only if the assessee was clearly informed of the precise limb on which penalty proceedings were initiated. An omnibus notice that does not strike off the irrelevant portion is vague and does not validly communicate the charge. In penalty matters, the statutory notice must independently and clearly set out the basis of proposed action, and any ambiguity must operate in favour of the assessee.

Conclusion: The penalty proceedings were vitiated by an invalid and vague notice, and the penalty under section 271(1)(c) was not sustainable.

Ratio Decidendi: A penalty under section 271(1)(c) cannot be imposed where the statutory notice under section 274 fails to specify the exact charge, because an omnibus and vague notice does not validly initiate penalty proceedings.

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