Penalty for non-compliance with tax notices held unsustainable where replies were filed on the due dates.

Penalty under section 271(1)(b) was found unwarranted where the assessee had responded to the notices issued under section 142(1), including replies filed on the due dates. The Tribunal recorded that the first notice was complied with by furnishing the return and supporting documents, and the later notices were also met with timely replies. On these facts, it accepted that there was reasonable cause under section 273B and that the statutory notices had been substantially complied with. The penalty order was therefore held unsustainable and was directed to be deleted.

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Issues: Whether penalty under section 271(1)(b) of the Income-tax Act, 1961 was leviable for alleged non-compliance with notices under section 142(1) of the Income-tax Act, 1961, and whether the assessee had shown reasonable cause under section 273B of the Income-tax Act, 1961.

Analysis: The assessee had responded to each of the notices issued under section 142(1), including replies filed on the dates fixed for compliance. The Tribunal found that the first notice was complied with by furnishing the return and related documents, the second notice was met with a reply on the due date, and the third notice was also replied to within time. On these facts, the Tribunal held that the assessee had complied with the statutory notices and that the surrounding circumstances disclosed reasonable cause, making the penal provision inapplicable. The Tribunal further noted the completed assessment proceedings and held that, in the facts of the case, the penalty order could not be sustained.

Conclusion: The penalty under section 271(1)(b) of the Income-tax Act, 1961 was not sustainable and was directed to be deleted.

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