147 dismissed with 0 demand but with 271F penalty for ITR1 with less than 10K income - pay/not pay?

My client (the assessee) was issued a 148/147 notice citing escape of income tax for purchasing a joint property with spouse. This was for a prior AY before 2020. It took a year of back and forth submitting proofs and submitting ITR1 in retrospect showing income of <10K for that prior AY for the assessee. Finally, the NFAC closed the order with 0 demand. They were satisfied that the property was purchased completely by the funds from the spouse and not the assessee. The assessee had an immaculate trail of funds transferred to the builder which really helped (learning). However, the NFAC has issued 271F penalty for late filing of the ITR1 returns for that prior AY. My assessee had income less than 10K in that prior AY. We still filed the ITR1 to help bring closure to the 148/147 case. Technically, we believe the assessee did not have to file the ITR1 for that prior AY. Question: Should we contest the 271F penalty show cause notice OR should we pay it and be done with the case? Can someone please help us with what the law says? Appreciate the guidance. We are worried that if we pay the penalty for late ITR1 filing via the 271F notice, it may mean we accepted wrong doings in the 147/148 case (which is not correct as the case was closed with 0 demand).