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<h1>Specific charge requirement in Section 274 notices prevents imposition of Section 271(1)(c) penalty when alternatives remain unstruck.</h1> 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) ... Failure to strike off charges in penalty notice - non-application of mind in issuing penalty notice Failure to strike off charges in penalty notice - non-application of mind in issuing penalty notice - Validity of penalty notice under section 271(1)(c) where the Assessing Officer did not strike off one of the twin charges - HELD THAT: - The Tribunal held that the show-cause notice under section 274 read with section 271(1)(c) was invalid because the Assessing Officer did not strike off either of the twin charges (concealment of particulars of income or furnishing inaccurate particulars). The failure to exclude the irrelevant charge demonstrated non-application of mind at the stage of issuing the notice. The Tribunal applied binding precedents cited in the order - Mohd. Farhan A Shaik [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)], Ganga Iron and Steel Trading Co. [2021 (12) TMI 1094 - BOMBAY HIGH COURT], and Jahangir [2023 (9) TMI 499 - BOMBAY HIGH COURT] - to conclude that a notice issued without being sure of the basis of penalty cannot sustain the penalty proceedings, and therefore the penalty order must be quashed. [Paras 9] The penalty notice was invalid for non-application of mind and the penalty order was quashed; the CIT(A)'s confirmation was reversed. Final Conclusion: The Tribunal allowed the appeal, quashed the penalty order under section 271(1)(c) for want of a valid show-cause notice (failure to strike off charges and non-application of mind), and reversed the CIT(A)'s confirmation of penalty. 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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