BharatTax Research·Published 19 September 2026
Concealment and furnishing inaccurate particulars are two different charges. A notice that does not say which is levelled has been held to vitiate the whole proceeding — a point now carried by a Full Bench, and migrating to section 270A.
The rule
A notice under section 274 read with section 271(1)© must specify which limb is invoked — concealment of particulars of income, or furnishing inaccurate particulars. A notice that leaves both standing, with the inapplicable portion not struck off, does not tell the assessee what case he has to meet, and the penalty proceedings founded on it are vitiated.
CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar) put the reasoning at paragraph 60:
Clause © deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income… drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law.
The distinction it rests on is not new — Ashok Pai v. CIT (2007) 292 ITR 11 (SC) had already held that the two expressions “denote two different connotations”. Manjunatha’s contribution was to make the consequence procedural: if they are different charges, the notice must pick one.
It is relied on in 2,585 judgments on BharatTax and was applied as recently as 15 April 2026.
Is it still good law? Yes, and it has been reinforced twice
| Decision | What it did | Cited |
|---|---|---|
| CIT v. SSA’s Emerald Meadows 73 Taxmann.com 241 (Kar) | Followed Manjunatha; the Revenue’s SLP was dismissed by the Supreme Court in CC No. 11485/2016 on 5 August 2016 | 931 |
| Mohd. Farhan A. Shaikh v. ACIT (2021) 434 ITR 1 (Bom) | Full Bench at Goa. The most authoritative treatment, and the one to cite before the Mumbai and Pune benches | 405 |
| CIT v. Shri Samson Perinchery (2017) 392 ITR 4 (Bom) | Same view in Bombay, pre-dating the Full Bench | 376 |
| PCIT v. Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Del) | Same view in Delhi | 182 |
| Sundaram Finance Ltd. v. ACIT, T.C.(A) 876–877 of 2008, 23.04.2018 (Mad) | Same view in Madras — non-striking of a limb renders the notice invalid. Not to be confused with the separate Sundaram Finance SLP dismissal at 259 Taxman 220, which concerns depreciation on non-existent assets | 241 |
The position is therefore held across Karnataka, Bombay, Delhi and Madras, with a Full Bench behind it.
One argument the Department still runs, and it is not frivolous. Dismissal of a special leave petition in limine is not a declaration of law under Article 141 and does not merge the High Court’s judgment into a Supreme Court one. So Emerald Meadows is not, strictly, a Supreme Court ruling on the point — it is the Supreme Court declining to interfere. Cite it for what it is, and lead with the Full Bench.
The problem it solved
The printed notice in use for decades set out both limbs and invited the Assessing Officer to strike out the inapplicable one. In practice neither was struck out. The assessee was left to guess the charge, and the penalty order would frequently find a different offence from the one the proceedings were initiated for. Manjunatha treated that as a failure of natural justice rather than a clerical slip.
How the Tribunal actually applies it
Mechanically, and in the assessee’s favour. Recent orders in the corpus record the Tribunal quashing penalties where the notice did not specify the limb and the inapplicable portion was not struck off — at Delhi following Emerald Meadows, at Mumbai following the jurisdictional Full Bench in Mohd. Farhan A. Shaikh, and elsewhere on the strength of the High Court authorities generally.
Two practical features are worth noting. The Tribunal frequently reproduces the notice in the order, which tells you the document itself is the evidence — obtain and read the actual notice, not the assessment order’s description of it. And the objection is jurisdictional, so it is being entertained even where raised late, as an assumption-of-jurisdiction ground.
What to check on any penalty notice
- Is the limb specified in the s.274 notice itself — not merely in the assessment order or the penalty order?
- Has the inapplicable portion been struck off?
- Does the limb in the notice match the limb in the final penalty order?
- Which High Court is jurisdictional for your bench, and what is its position?
- For AY 2017-18 onwards, is this a s.270A case rather than s.271(1)©?
When it will not help
Where the notice does specify the limb. Then the argument is spent and the case moves to the merits of the penalty.
Where the charge is obvious and the assessee engaged with it. Some benches have been readier than others to ask whether the assessee was in fact prejudiced. The Full Bench is the answer to that argument in Bombay; it is worth knowing your bench’s position before making the point the centrepiece.
Where the penalty is under another provision. The reasoning is specific to a section carrying two alternative charges. Section 271AAB, on undisclosed income found in a search, is structured differently and needs its own analysis.
The provision has been replaced — and the argument has followed it
Section 271(1)© applies to assessment years up to 2016-17. From AY 2017-18, penalties for the same kind of default run under section 270A, inserted by the Finance Act 2016, which distinguishes under-reporting from misreporting of income. The consequences differ materially: 50 per cent of the tax payable on under-reported income, against 200 per cent where the under-reporting is in consequence of misreporting.
Section 270A already appears in 2,098 judgments in our corpus, and the Manjunatha logic is visibly migrating: orders have begun recording that the notice must specify the limb “whether for under reporting or misreporting of income”. Whether the courts will carry the principle across in full is not yet settled, but the argument is live and worth raising now rather than later.
Where the citation figures come from
Citation figures come from an analysis of 292,668 ITAT, High Court and Supreme Court judgments on BharatTax.net. Manjunatha Cotton is relied on in 2,585 of them. “Cited” counts judgments mentioning the authority and does not distinguish a case followed from one distinguished.