Penalty for non-compliance with notices set aside where return was filed and non-appearance had a genuine explanation.

Penalty for non-compliance with notices was held unsustainable where the assessee had already filed returns in response to the reopening notice and the assessment record noted that response. For the later notice, absence was explained by the authorised consultant's illness, which was treated as a genuine cause for non-appearance. On these facts, the basis for penal action for failure to comply was not made out, and the same factual position applied to both assessment years. The penalty under section 271(1)(b) was therefore not justified, and the appeals were allowed in favour of the assessee.

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Issues: Whether the penalty levied for non-compliance with notices was sustainable where the assessee had responded to the reopening notice and showed a genuine for non-appearance, and whether the penalty orders for both assessment years called for interference.

Analysis: The assessee had filed returns in response to the reopening notice and the assessment record itself noted the response. For the later notice, the explanation was that the authorised consultant was ill and could not appear, which was treated as a genuine reason for the default. On these facts, the basis for penal action for failure to comply was not made out, and the same factual matrix applied to both years.

Conclusion: The penalty under section 271(1)(b) was not justified, and both appeals were allowed in favour of the assessee.

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