Limitation for penalty proceedings under Section 271D ran from the Assessing Officer's reference, quashing the penalty order.

Penalty under Section 271D was held time-barred because limitation under Section 275(1)(c) was computed from the Assessing Officer's reference to the penalty authority, not from the later show-cause notice. Where two views on initiation were possible, the Tribunal adopted the view favourable to the assessee and followed the High Court ruling relied on before it. The plea to exclude time for rehearing on change of incumbent was rejected because Explanation (i) to Section 275 applies only where the assessee seeks rehearing under the proviso to Section 129, and no such request was shown. The penalty order was quashed.

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Issues: Whether the penalty order under Section 271D was barred by limitation under Section 275(1)(c), and whether the time alleged to have been taken for rehearing on change of incumbent was liable to be excluded under Explanation (i) to Section 275 read with Section 129.

Analysis: The limitation question turned on the date of initiation of penalty proceedings. The competing views were whether initiation occurred on the Assessing Officer's reference to the Additional Commissioner or on the later show-cause notice issued by the penalty authority. The Tribunal preferred the view that the reference by the Assessing Officer was the triggering point, following the later High Court ruling relied upon before it and the principle that, where two views are possible, the one favourable to the assessee should be adopted. On the exclusion plea, the Tribunal held that Explanation (i) to Section 275 applies only where the assessee demands rehearing under the proviso to Section 129, and no such request was shown on record.

Conclusion: The penalty order was held to be time-barred and was quashed. The assessee's appeals were allowed.

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