Section 271D penalty barred by limitation and unsustainable on bona fide cash receipt from agricultural land sale.

Penalty under section 271D was held time-barred under section 275(1)(c) because limitation ran from the Assessing Officer's reference for penalty during assessment proceedings, not from the later notice by the Joint Commissioner; the order was therefore beyond the six-month period and quashed. On merits, penalty was also found unsustainable because the cash receipt arose from a genuine sale of agricultural land, the consideration was reflected in the registered sale deed and return, and there was no indication of concealment or black money. The transaction was treated as covered by reasonable cause under section 273B, so penalty was deleted.

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Issues: (i) Whether the penalty under section 271D was barred by limitation under section 275(1)(c) of the Income-tax Act, 1961; and (ii) whether penalty under section 271D could be sustained for cash received on sale of agricultural land, having regard to sections 269SS and 273B of the Income-tax Act, 1961.

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

Analysis: The relevant date for limitation was held to be the date on which the Assessing Officer forwarded the proposal for penalty during the assessment proceedings, and not the later date on which the Joint Commissioner issued notice. On that basis, the period of six months from the end of the month of initiation expired much earlier than the date of the penalty order. The penalty order was therefore beyond the prescribed time limit.

Conclusion: The penalty order was barred by limitation and was liable to be quashed, in favour of the assessee.

Issue (ii): Whether penalty under section 271D could be sustained for cash received on sale of agricultural land, having regard to sections 269SS and 273B of the Income-tax Act, 1961.

Analysis: The transaction was a genuine sale of agricultural land, the consideration was recorded in the registered sale deed and disclosed in the return, and there was no material indicating concealment or black money. The expression "specified sum" in section 269SS was considered in the context of the legislative object of curbing cash advances in immovable property transactions, and the facts showed a bona fide belief and reasonable cause for acceptance of cash. The case thus fell within the protective scope of section 273B.

Conclusion: Penalty under section 271D was not exigible on merits and was deleted, in favour of the assessee.

Final Conclusion: The penalties for all the assessment years were set aside, and the assessee's appeals succeeded in full.

Ratio Decidendi: For penalty under section 271D, limitation under section 275(1)(c) runs from the date the Assessing Officer initiates penalty action by reference to the competent authority during assessment proceedings, and a bona fide, genuine cash receipt in a sale of agricultural land may attract the protection of section 273B where reasonable cause is shown.

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