Limitation for Section 271D penalty under cash receipt rules governed by Section 275(1)(c), making the order time-barred.

Penalty under Section 271D for receipt of cash in breach of Section 269SS was treated as an independent penalty proceeding, so the limitation rule in Section 275(1)(c) applied. On that basis, the authority had to complete the penalty within six months from the end of the month in which initiation of penalty action occurred. As the penalty order was passed after that period, the penalty was barred by limitation and could not be sustained.

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Issues: Whether the penalty levied under Section 271D of the Income-tax Act, 1961 was barred by limitation, and whether the limitation period under Section 275(1)(c) applied to the facts of the case.

Analysis: The penalty was initiated on the basis of material gathered during search and assessment proceedings, but it was not linked to any assessment or other proceedings in a manner that would attract a different limitation regime. The penalty was imposed for violation of Section 269SS, namely receipt of cash in excess of the prescribed limit, and therefore the applicable limitation provision was Section 275(1)(c), under which penalty proceedings had to be completed within six months from the end of the month in which action for imposition of penalty was initiated. The penalty order was passed beyond that period.

Conclusion: The penalty was barred by limitation and the Revenue's appeal failed.

Final Conclusion: The order upholding the limitation defence was sustained, leaving the penalty unsustainable in law.

Ratio Decidendi: Where penalty under Section 271D is imposed independently for breach of Section 269SS, the limitation period under Section 275(1)(c) governs its completion.

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