Quasi-criminal penalty for notice non-compliance fails absent deliberate defiance; subsequent compliance led to deletion.

Penalty under section 271(1)(b) was treated as a quasi-criminal consequence, so it required more than mere delay or isolated non-compliance; deliberate defiance, contumacious conduct, or conscious disregard of the statutory duty had to be shown. Although there was non-compliance with the notice dated 21.08.2018, the record showed that the assessee subsequently complied with the statutory notices and the assessment was completed under section 143(3). As the default was not found to be deliberate or dishonest, the penalty was regarded as imposed only to deter delayed compliance and was deleted.

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Issues: Whether penalty under section 271(1)(b) of the Income-tax Act, 1961 was sustainable for alleged non-compliance with notice issued under section 142(1) of the Income-tax Act, 1961, when the assessee had subsequently complied with the statutory notices and the assessment was completed under section 143(3) of the Income-tax Act, 1961.

Analysis: Penalty for failure to carry out a statutory obligation is in the nature of a quasi-criminal consequence and is not ordinarily warranted unless the default reflects deliberate defiance of law, contumacious or dishonest conduct, or conscious disregard of the legal obligation. The record showed compliance by the assessee with the statutory notices after August 2018, and the non-compliance with the notice dated 21.08.2018 was not found to be deliberate or contumacious. In these circumstances, the penalty was treated as having been imposed merely as a deterrent for delayed compliance rather than for a culpable default.

Conclusion: The penalty under section 271(1)(b) of the Income-tax Act, 1961 was deleted and the assessee succeeded on this issue.

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