Specific penalty charge in statutory notice is essential; an unspecified section 271AAB charge invalidates the penalty proceeding.

A penalty under section 271AAB requires the statutory notice to specify the applicable charge or penalty category. Because the categories carry distinct consequences and rates, failure to identify the relevant clause denies the assessee an effective opportunity to respond and invalidates penalty initiation. The related assessment had also recharacterised the disclosed amount from unexplained investment to income from other sources taxable at normal rates. The article states that the section 271AAB penalty was consequently deleted.

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Issues: Whether a penalty under section 271AAB could survive where the statutory notice did not specify the applicable charge or category of penalty.

Analysis: The notice initiating penalty proceedings did not identify the clause of section 271AAB under which penalty was proposed. The applicable categories carried distinct statutory consequences and rates; consequently, failure to communicate the precise charge deprived the assessee of an effective opportunity to respond. The quantum assessment had also been reversed to the extent it treated the disclosed amount as unexplained investment, with the amount directed to be assessed as income from other sources at normal rates.

Conclusion: The unspecified charge rendered the initiation of penalty proceedings invalid, and the penalty levied under section 271AAB was deleted in favour of the assessee.

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