Limitation for section 271D penalty runs from initiation of proceedings, making a delayed order time-barred

For section 271D penalty, limitation under section 275(1)(c) runs from initiation of penalty proceedings, namely the first show-cause notice dated 30.03.2021. On that basis, the penalty order dated 25.01.2022 was beyond the prescribed period and therefore time-barred. The CBDT Notification No. 113/2021 and the related transitional relaxation did not save the order on the facts found. The earlier reasoning of the first appellate authority was accepted, and the penalty was treated as invalid and liable to be 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 CBDT notification extending time applied to save the order.

Analysis: The relevant date for limitation was taken as the initiation of penalty proceedings through the first show-cause notice dated 30.03.2021. On that basis, the penalty order ought to have been passed within the period prescribed by section 275(1)(c), and the order dated 25.01.2022 was beyond that period. The plea based on Notification No. 113/2021 and the relaxation under the relevant transitional provision was rejected because the extended timeline did not assist the Revenue on the facts found. The earlier factual and legal reasoning of the first appellate authority was found to be correct.

Conclusion: The penalty order was held to be time-barred and invalid, and the assessee succeeded on the limitation issue.

Final Conclusion: The penalty under section 271D did not survive, the Revenue's challenge failed, and the assessee obtained relief.

Ratio Decidendi: For the purpose of section 275(1)(c), limitation runs from the initiation of penalty proceedings, and a penalty order passed beyond the prescribed period is void and liable to be quashed.

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