Defective penalty notice under section 271(1)(c) vitiates proceedings when the exact limb is not specified.

Penalty under section 271(1)(c) was held unsustainable where the section 274 notice was issued in a pre-printed omnibus format without striking off the inapplicable limb. The notice failed to specify the precise charge, leaving both limbs open and rendering it vague and ambiguous. The defect was treated as fatal because penalty proceedings require clear identification of the exact limb invoked. As a result, the penalty proceedings were vitiated by the defective notice.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable when the notice under section 274 read with section 271 was issued in a pre-printed omnibus format without striking off the inapplicable limb.

Analysis: The notice was found to be a pre-printed performa that did not specify the exact charge by deleting the irrelevant portion, making it vague and ambiguous. Reliance was placed on the principle that penalty proceedings under section 271(1)(c) require clear specification of the precise limb invoked, and an omnibus notice that leaves both limbs open suffers from a fatal defect.

Conclusion: The penalty proceedings were held to be vitiated by the defective notice and the penalty was not sustainable.

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