Penalty for non-compliance with tax notices upheld where failure to produce accounts was found without reasonable cause.

Failure to produce accounts and comply with statutory notices was treated as a default without reasonable cause, making penalty under the Income-tax Act and the Excess Profits Tax Act sustainable. The Court noted that an earlier finding on the same material had already held the default to be wilful and without sufficient cause, and that finding could be relied upon. It also held that the distinction between "sufficient cause" and "reasonable cause" made no practical difference on the facts found. The Tribunal's failure to record an express finding on reasonable cause did not change the substantive result, because the evidence supported the penalty.

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Issues: Whether the assessee's failure to produce accounts and comply with the statutory notices was without reasonable cause, so as to justify penalties under the Income-tax Act and the Excess Profits Tax Act.

Analysis: The assessee had been repeatedly called upon to produce accounts, but failed to do so on the appointed date. The earlier reference had already held, on the same material, that the default was wilful and without sufficient cause, and that finding was treated as binding. The Court considered the distinction between "sufficient cause" and "reasonable cause" and held that, on the facts found, there was no substantial difference for the assessee's case. The explanation offered for non-production of accounts was rejected on the evidence, and the authorities below were justified in treating the default as attracting penalty. The Tribunal ought to have expressly recorded the finding on reasonable cause, but that omission did not alter the substantive position on the merits.

Conclusion: The failure to comply with the notices was without reasonable cause, and the penalties imposed under both enactments were justified.

Ratio Decidendi: Where an assessee fails to comply with statutory notices without reasonable cause, a penalty under the relevant taxing provision is sustainable, and a prior binding finding on the same material may be relied upon to support that conclusion.

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