Vague penalty notice under section 271(1)(c) invalid where the charge was not specifically identified.

A penalty notice under section 274 read with section 271(1)(c) was invalid where it did not strike off the inapplicable limb and failed to specify whether the charge was concealment of income or furnishing inaccurate particulars. The statutory notice had to clearly inform the assessee of the precise allegation, and penalty proceedings could not rest on an omnibus or vague notice. Such ambiguity was treated as a jurisdictional defect and, in penal matters, was resolved in favour of the assessee. The consequential penalty under section 271(1)(c) was quashed.

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Issues: Whether the penalty notice issued under section 274 read with section 271(1)(c) of the Income-tax Act, 1961 was invalid for not striking off the inapplicable limb and, if so, whether the consequential penalty could stand.

Analysis: The notice did not specify whether the proposed penalty was for concealment of income or for furnishing inaccurate particulars of income. The penalty proceedings had to stand on their own and the assessee was entitled to clear notice of the precise charge through the statutory notice itself. An omnibus or vague notice was held to suffer from a jurisdictional defect, and ambiguity in penal proceedings had to be resolved in favour of the assessee.

Conclusion: The penalty notice was invalid and the penalty imposed under section 271(1)(c) was quashed.

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