Penalty notice vagueness under section 274 rendered concealment-based penalty unsustainable and deleted.

Penalty under section 271(1)(c) was unsustainable where the section 274 notice failed to specify whether the charge was concealment of income or furnishing inaccurate particulars. The omission to strike off the irrelevant limb was treated as a fatal jurisdictional defect because the assessee was not informed of the exact default alleged. The defect could not be cured by the assessment order or the penalty order, and an omnibus notice was held void for vagueness. The penalty was therefore deleted.

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Issues: Whether a penalty levied under section 271(1)(c) of the Income-tax Act, 1961 could be sustained when the notice under section 274 did not specify whether the proceedings were for concealment of income or for furnishing of inaccurate particulars of income.

Analysis: The statutory notice initiating penalty proceedings did not strike off the irrelevant limb and therefore did not communicate the specific charge to the assessee. The omission was treated as a fatal jurisdictional defect. The defect could not be cured by reference to the assessment order or the penalty order. In view of the binding precedents relied upon, an omnibus notice lacking specification of the exact limb of default was held to be void for vagueness.

Conclusion: The penalty was held unsustainable and was directed to be deleted, in favour of the assessee.

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