Penalty notice vagueness under section 274 defeats section 271(1)(c) penalty when the exact charge is not specified.

A penalty notice under section 274 was treated as invalid because it did not specify whether the charge was concealment of income or furnishing inaccurate particulars of income. The omission left the assessee without clear notice of the exact allegation, making the notice omnibus and vague. The defect was treated as jurisdictional and could not be cured by references in the assessment order or penalty order. Applying the cited precedents, the penalty sustained on that notice could not stand and was deleted.

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Issues: Whether the penalty notice issued under section 274 of the Income-tax Act, 1961 was invalid for not specifying the exact limb under section 271(1)(c), and whether the penalty sustained on that basis could stand.

Analysis: The notice did not state whether the proceedings were initiated for concealment of income or for furnishing inaccurate particulars of income. Such non-specification left the assessee uninformed of the exact charge and rendered the notice omnibus and vague. The defect was treated as jurisdictional and not curable by references in the assessment order or penalty order. In view of the binding precedents relied upon, the penalty could not be sustained on a notice that failed to strike off the irrelevant limb and clearly convey the allegation.

Conclusion: The penalty notice was held to be defective and the penalty was deleted; the issue was decided in favour of the assessee.

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