Limitation for penalty proceedings under section 271D runs from initiation by reference and notice, making a delayed order void.

Penalty proceedings under section 271D were treated as barred by limitation under section 275(1)(c) where the six-month period was held to run from the date the Assessing Officer initiated the proceedings by reference and the competent authority applied its mind and issued notice. Applying the Delhi High Court view and finding no contrary authority, the Tribunal concluded that the penalty order was passed after the prescribed period. The time-bar rendered the order without jurisdiction and void, so the penalty was held invalid in favour of the assessee.

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Issues: Whether the penalty order under section 271D was barred by limitation under section 275(1)(c) of the Income-tax Act, 1961, and consequently without jurisdiction.

Analysis: The Tribunal held that, for the purpose of section 275(1)(c), the relevant date for commencement of limitation is the date on which the Assessing Officer initiates the penalty proceedings by making the reference and the competent authority applies its mind and issues notice. Following the binding view of the Delhi High Court and in the absence of any contrary authority brought to its notice, the Tribunal held that the order in question had been passed beyond the prescribed six-month period. Once the order was time-barred, it was treated as having been passed without jurisdiction and as void.

Conclusion: The penalty order was held to be barred by limitation and invalid, and the issue was decided in favour of the assessee.

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