Penalty notice must specify the exact charge; a vague Section 274 notice makes Section 271(1)(c) proceedings unsustainable.

Penalty proceedings under Section 271(1)(c) require a clear and specific charge, and a Section 274 notice must state whether the allegation is concealment of income or furnishing inaccurate particulars. A standard form notice that does not strike off the inapplicable limb shows non-application of mind and denies the assessee a fair opportunity to respond. On this basis, the initiation of penalty proceedings was unsustainable and the penalty was deleted.

---

---

Issues: Whether the penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961 were valid when the notice under Section 274 did not specify whether the charge was concealment of income or furnishing of inaccurate particulars of income.

Analysis: Penalty under Section 271(1)(c) can be initiated only on a clear and specific charge. The notice issued in standard form without striking off the inapplicable limb did not inform the assessee of the exact allegation. Such a notice reflects non-application of mind and deprives the assessee of a fair opportunity to meet the charge. On this basis, the initiation of penalty proceedings was held to be unsustainable.

Conclusion: The penalty proceedings were invalid and the penalty was deleted.

---