Penalty for non-compliance with tax notice requires deliberate defiance, not a mere default, where later compliance is made.

Penalty under section 271(1)(b) for non-compliance with a notice under section 142(1) was treated as unsustainable where the assessee's default was non-deliberate and compliance was later made. The note states that such penalty requires more than a mere lapse; deliberate defiance, contumacious conduct, dishonesty, or conscious disregard of the legal obligation must be shown. As the assessment was ultimately completed under section 143(3) and the necessary ingredients for penalty were not established, the penalty was deleted.

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Issues: Whether penalty under section 271(1)(b) of the Income-tax Act, 1961 was sustainable for non-compliance with notice under section 142(1) of the Income-tax Act, 1961.

Analysis: The assessee's failure to comply with the notice issued through email was found to be non-deliberate, as compliance was later made and the assessment was completed under section 143(3) of the Income-tax Act, 1961. Penalty for failure to carry out a statutory obligation was treated as requiring more than mere default, and could not be justified absent deliberate defiance, contumacious conduct, dishonesty, or conscious disregard of the legal obligation.

Conclusion: The penalty was deleted as the ingredients necessary to sustain action under section 271(1)(b) were not established.

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