Penalty for faceless notice non-compliance must stay proportionate, with only one penalty for a common continuing default.

Penalty under section 271(1)(b) for non-compliance with faceless assessment notices was upheld in principle because a corporate assessee was expected to monitor the e-proceedings portal and non-receipt of notices was not accepted as reasonable cause. However, where multiple notices arose from the same continuing default, separate penalties were not justified; the sanction had to remain proportionate and limited to a single default, with assessment to proceed under section 144 rather than through repeated penalties.

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Issues: Whether penalty under section 271(1)(b) of the Income-tax Act, 1961 was leviable for non-compliance with notices issued in faceless assessment proceedings, and whether separate penalties could be sustained for multiple defaults arising from the same cause.

Analysis: The assessee, being a corporate entity, was expected to monitor the e-proceedings portal, and the plea of non-receipt of notices was not accepted as reasonable cause for non-compliance with statutory notices. At the same time, the provision was held to operate as a deterrent and not as a revenue-raising measure. Where the default stems from the same cause, repeated penalties for multiple notices are not justified, and the appropriate consequence is the completion of assessment under section 144 rather than multiplicity of penalties.

Conclusion: Penalty for non-compliance was upheld in principle, but the quantum was restricted to a single penalty of Rs. 10,000/- instead of Rs. 30,000/-.

Ratio Decidendi: For a common and continuing default, section 271(1)(b) does not justify multiple penalties for each notice where the same non-compliance forms the basis of the lapse; the sanction must remain proportionate and limited to a single default.

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