Notice specificity under section 271(1)(c) requires identifying the applicable limb; failure invalidates the penalty imposed.

A penalty notice invoking both limbs of section 271(1)(c) without specifying which limb applied or striking off the inapplicable limb was held defective; the procedural requirement of limb-specific notice is decisive and renders any consequent penalty vulnerable irrespective of the merits of underlying income additions or application of section 145(3). Because the notice failed to identify the particular limb under which proceedings were initiated, the penalty under section 271(1)(c) was quashed and the appeal allowed in favour of the assessee.

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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 notice invoked both limbs of section 271(1)(c) without specifying which limb was applicable and the inapplicable portion was not struck off.

Analysis: The notice issued under section 271(1)(c) mentioned both limbs-concealment of particulars of income and furnishing inaccurate particulars of income-without striking off the inapplicable limb. The Assessing Officer applied section 145(3) to reject books and estimated profits, and levied penalty under section 271(1)(c) for furnishing inaccurate particulars. The Tribunal followed the binding precedent of the Hon'ble Delhi High Court holding that a penalty notice under section 271(1)(c) must specify the limb under which proceedings are initiated and that failure to do so renders the notice and consequent penalty liable to be quashed. The defect in the notice was decisive irrespective of the merits of the underlying additions or estimation of income.

Conclusion: The penalty order under section 271(1)(c) is quashed and the appeal is allowed in favour of the assessee.

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