Reasonable cause under section 273B protected an assessee from penalty for non-compliance with income-tax notices.

Penalty for non-compliance with assessment notices under section 271(1)(b) of the Income-tax Act, 1961 was held unsustainable where the assessee established reasonable cause under section 273B. The Tribunal accepted that the assessee was not conversant with income-tax proceedings and lacked effective access to the portal, which explained the failure to respond to notices. It also noted that the quantum matter had been restored to the Assessing Officer, supporting the assessee's explanation on the facts. On this basis, the Tribunal found the default covered by section 273B and deleted the penalty.

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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 when the assessee claimed reasonable cause under section 273B of the Income-tax Act, 1961.

Analysis: The assessee had failed to respond to the notices issued during assessment proceedings, resulting in penalty for repeated non-appearance. The Tribunal accepted the explanation that the assessee was not conversant with income-tax proceedings and had no effective access to the portal, and noted that the quantum matter had been restored to the Assessing Officer in appeal. On these facts, the Tribunal held that the assessee had shown reasonable cause within the meaning of section 273B, which protected him from penalty for the alleged defaults.

Conclusion: The penalty under section 271(1)(b) of the Income-tax Act, 1961 was deleted and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Penalty for failure to comply with notices cannot be sustained where the assessee establishes reasonable cause under section 273B of the Income-tax Act, 1961.

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