Penalty notice specificity invalidates penalty when notice fails to identify which limb invoked, resulting in quashing of penalty.

Penalty under Section 271(1)(c) was quashed because the show cause notice ambiguously invoked both concealment and inaccurate particulars without specifying which limb applied, and the appellate order lacked coherent reasoning and displayed non application of mind; the Tribunal applied the principle that a penalty notice must specifically and unambiguously indicate the limb of the penalty provision invoked, and concluded that ambiguity in the notice together with defective appellate adjudication vitiated the penalty proceedings, resulting in allowance of the taxpayer's challenge and quashing of the penalty order.

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Issues: Whether the penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961 can be sustained where the show cause notice dated 15.09.2017 is ambiguous as to which limb of Section 271 is attracted and whether the impugned order of the First Appellate Authority should be quashed for want of coherent reasoning and non-application of mind.

Analysis: The Tribunal examined whether the penalty proceedings were initiated by a notice that clearly identified the specific limb of Section 271 applicable to the assessee and whether the First Appellate Authority discharged its quasi-judicial duty with coherent reasoning. The Tribunal considered the assessment order and the record of the show cause notice which, on its face, called show cause on both concealment of particulars and furnishing of inaccurate particulars without specifying the exact limb. The Tribunal further examined the impugned appellate order for adequacy of reasoning and found the order internally inconsistent, recording dismissal on procedural grounds while also dealing with merits, and thereby reflecting non-application of mind and lack of judicial discipline in quasi-judicial adjudication. The Tribunal relied on authority establishing that a penalty notice must categorically specify the limb under which penalty is proposed and that absence of such specificity vitiates the proceedings.

Conclusion: The penalty order is quashed and the assessee's appeal is allowed; the levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961 cannot be sustained due to the ambiguity in the show cause notice and the impugned appellate order's failure to apply judicial mind.

Ratio Decidendi: A penalty notice must specifically and unambiguously indicate which limb of a penalty provision is invoked; where the notice is ambiguous and the appellate order demonstrates non-application of mind, the penalty proceedings are vitiated and the penalty order must be quashed.

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