Reasonable cause for non-compliance during the Covid-19 period led to deletion of penalty for notice defaults.

Penalty under section 271(1)(b) for non-compliance with notices under section 142(1) was deleted where the assessee established reasonable cause under section 273B. The Tribunal noted that the notices were issued during the Covid-19 period and held that the same period of disruption could not be treated differently for separate notices. On the facts, the assessee's failure to respond was justified by the pandemic-related circumstances, so the penalty could not be sustained for any of the assessment years.

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Issues: Whether the penalty levied under section 271(1)(b) of the Income-tax Act, 1961 for non-compliance with notices under section 142(1) could be sustained when the assessee claimed reasonable cause under section 273B in view of the Covid-19 pandemic.

Analysis: The assessee had not responded to the notices issued during the assessment proceedings, and the lower appellate authority had already granted partial relief by reducing the penalty for some notices. The Tribunal found that all the relevant notices were issued during the period affected by the Covid-19 pandemic and that the non-compliance could not be viewed in two different ways for the same period. On the facts, the assessee established reasonable cause within the meaning of section 273B.

Conclusion: The penalty under section 271(1)(b) of the Income-tax Act, 1961 was deleted in full for all the assessment years and the appeals were allowed.

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