Penalty for non-compliance with statutory notices upheld in principle, but reduced where the default was not deliberate.

Non-compliance with repeated notices under section 142(1) justified levy of penalty, because the assessee failed to respond and the default contributed to an ex parte assessment under section 144. Reliance on a tax consultant was not accepted as reasonable cause under section 273B, since the primary duty to comply with statutory notices remained with the assessee. The penalty under section 271(1)(b) was therefore upheld in principle, but the facts did not indicate deliberate tax evasion and the quantum was found excessive; accordingly, it was reduced from Rs. 30,000 to Rs. 10,000.

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Issues: Whether penalty for non-compliance with notices under section 142(1) was justified and whether the assessee showed reasonable cause under section 273B warranting deletion or reduction of penalty.

Analysis: The assessee did not comply with repeated statutory notices, which obstructed the assessment and resulted in an ex parte assessment under section 144. Reliance on a tax consultant did not absolve the assessee of the primary obligation to respond to notices, and such reliance was not accepted as reasonable cause under section 273B. At the same time, the circumstances showed that the default was not deliberate in the sense of tax evasion, and the penalty levied at Rs. 30,000 was considered excessive in the facts of the case.

Conclusion: The penalty under section 271(1)(b) was upheld in principle but reduced from Rs. 30,000 to Rs. 10,000, resulting in partial relief to the assessee.

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