In a written communication to AAP state convener Dilip Pandey, the commission said that if the party fails to file the reply, the complaint will be decided ex parte.
"I am directly to kindly advice you to take remedial action and give comments on this complaint (Gupta's), within 48 hours, to this Commission for its perusal, otherwise complaint will be decided ex parte," Commission's Deputy Secretary Girish Pandey said in a communication to AAP.
The SEC's move comes a day after Leader of Opposition, Mr Gupta had met State Election Commissioner S K Srivastava and lodged a complaint seeking action against the Aam Aadmi Party.
The poster, seen in many parts of the city, carries photos of both Chief Minister Arvind Kejriwal and Mr Gupta and asks voters as to who they would prefer to hold the reins of the municipal corporations.
"The posters show a smiling face of Kejriwal while depict me in a distorted and villainous way," Mr Gupta had said. Mr Gupta had demanded the Election Commission get the posters removed and take action against the AAP.
"These are elections and not a beauty contest to be fought on the photo of leaders," the BJP leader had said, throwing challenge of an open debate to Kejriwal and AAP on issues.