Notice Specificity: penalty under Section 271(1)(c) unsustainable when notice fails to specify concealment or inaccuracy.

A challenge concerned whether a penalty under Section 271(1)(c) could stand where the initiating notice under Section 274 read with Section 271(1)(c) failed to state whether it was for concealment of particulars of income or for furnishing inaccurate particulars. The tribunal held that the two limbs have distinct meanings, the assessee must be informed which limb is invoked to enable effective response, and a proforma notice showing no application of mind is defective; accordingly the penalty was held unsustainable and deleted in favour of the assessee.

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Issues: Whether the penalty levied under Section 271(1)(c) of the Income-tax Act, 1961 is sustainable when the notice under Section 274 read with Section 271(1)(c) does not specify whether it is issued for concealment of particulars of income or for furnishing inaccurate particulars of income.

Analysis: The notice for initiating penalty proceedings under Section 274 r.w.s. 271(1)(c) does not expressly indicate which limb of Section 271(1)(c) is invoked. The two limbs of Section 271(1)(c) have distinct meanings and require the assessee to be made aware of the specific charge so as to enable an effective response. A standard proforma notice without striking off the inapplicable limb indicates non-application of mind at initiation stage. Judicial authorities addressing identical factual defects have held that failure to specify the limb renders the notice and consequent penalty proceedings unsustainable.

Conclusion: The penalty levied under Section 271(1)(c) of the Income-tax Act, 1961 is deleted and the appeal is allowed in favour of the assessee.

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