In case a notice is adjudicated under Section 51B and order issued confirming tax demand and penalty, does the noticee have any option to pay reduced penalty?

Yes. He needs to pay tax/interest and 50% of
penalty within 30 days of communication of order.
Where any person served with an order issued under
sub-section (6) of Section 51B pays the tax along with
interest and a penalty equivalent to fifty percent of such
tax within thirty days of the communication of order, all
proceedings in respect of the said tax shall be deemed to
be concluded.