Penalty notice defect in section 271(1)(c) matters: failure to specify the exact charge vitiates penalty proceedings.

Penalty proceedings under section 271(1)(c) were held unsustainable because the section 274 notice failed to specify whether the allegation was concealment of income or furnishing of inaccurate particulars. A vague or omnibus notice deprives the assessee of clear notice of the charge and prevents an effective defence, and the defect was treated as going to the root of the levy. The additional ground was allowed because the relevant facts were already on record, and the penalty could not be sustained.

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Issues: Whether penalty proceedings under section 271(1)(c) were vitiated because the penalty notice under section 274 did not specify the exact limb of concealment or furnishing of inaccurate particulars.

Analysis: The assessee was permitted to raise the additional ground because the relevant facts were already on record. The notice initiating penalty proceedings did not specify the precise charge, and the defect went to the root of the levy. In penalty matters, the assessee must be put to clear notice of the exact allegation so that an effective defence can be made. A vague or omnibus notice that fails to identify the applicable limb renders the proceedings unsustainable.

Conclusion: The penalty proceedings were vitiated and the penalty could not be sustained.

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