Specific charge requirement in Section 274 notices prevents imposition of Section 271(1)(c) penalty when alternatives remain unstruck.

A show cause notice invoking penalty must specify which alternative allegation is pursued; where a notice under Section 274 read with Section 271(1)(c) leaves both concealment and inaccurate particulars unstruck, it demonstrates lack of decisive application of mind and fails for want of a clear specific charge. The legal effect is that penalty proceedings cannot be sustained on such defective notice, resulting in quashing of the penalty and reversal of the confirming order in favour of the assessee.

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Issues: Whether the penalty under Section 271(1)(c) of the Income-tax Act, 1961 is valid where the notice under Section 274 read with Section 271(1)(c) did not clearly strike off one of the alternative charges (concealment of income or furnishing inaccurate particulars of income).

Analysis: The notice under Section 274 read with Section 271(1)(c) did not indicate a clear single charge by striking off the alternative charge, leaving both allegations (concealment of income and furnishing inaccurate particulars) extant in the notice. Where the issuing authority has not indicated which specific charge is being proceeded with, the notice lacks decisive application of mind and cannot validly sustain imposition of penalty. Binding authorities require a clear and specific charge in the show cause notice to validate penalty proceedings.

Conclusion: The penalty under Section 271(1)(c) of the Income-tax Act, 1961 is quashed and the order confirming penalty is reversed; the appeal is allowed in favour of the assessee.

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