Penalty notice specificity under income-tax law: vague section 274 notices without the exact charge are invalid and not saved by section 292B.

A penalty notice under section 274 read with section 271(1)(c) of the Income-tax Act must clearly specify whether the proposed penalty is for concealment of income or for furnishing inaccurate particulars. An omnibus or vague notice that does not strike off the inapplicable limb fails to convey the precise charge and is substantively defective. The defect was held not curable under section 292B because the notice itself did not satisfy the statutory requirement in substance. The penalty proceedings were therefore unsustainable, with ambiguity operating in favour of the assessee.

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Issues: Whether a penalty notice under section 274 read with section 271(1)(c) of the Income-tax Act, 1961 is vitiated when it does not specify whether the penalty is proposed for concealment of income or for furnishing inaccurate particulars, and whether such defect can be cured by reference to section 292B of the Act.

Analysis: The notice did not strike off the inapplicable limb and therefore failed to inform the assessee of the precise charge to be met. The defect was treated as substantive because the statutory notice is the vehicle through which the grounds of penalty must be conveyed. An omnibus and vague notice was held to be impermissible. The principle of strict construction of penal provisions was applied, and ambiguity was held to operate in favour of the assessee. Section 292B could not cure the defect where the notice itself did not conform in substance to the statutory requirement.

Conclusion: The defective penalty notice was invalid, and the penalty proceedings could not be sustained. The issue was decided in favour of the assessee and against the Revenue.

Ratio Decidendi: A penalty notice under section 274 read with section 271(1)(c) must clearly specify the exact limb of default; an omnibus or vague notice vitiates the penalty proceedings and the defect is not cured by section 292B.

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