Limitation for penalty under section 271D turned on section 275(1)(c), making the time-bar fatal on the stated facts.

Penalty proceedings for violation of section 269SS were treated as independent of the assessment proceedings, so limitation for penalty under section 271D was governed by section 275(1)(c). On the stated facts, the penalty order was passed beyond six months from the end of the month in which assessment was completed, and also beyond six months from the notice dated 7.3.2011 referred to in the order. The penalty was therefore time-barred and the order was rightly set aside.

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Issues: Whether the penalty under section 271D was barred by limitation under section 275(1)(c) of the Income-tax Act, 1961.

Analysis: Penalty proceedings for violation of section 269SS were held to be independent of the assessment proceedings, and the period of limitation was therefore governed by section 275(1)(c). On the facts, the penalty order was passed beyond six months from the end of the month in which the assessment was completed, and was also beyond six months from the notice dated 7.3.2011 referred to in the penalty order.

Conclusion: The penalty order under section 271D was time-barred and was rightly set aside.

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