Penalty limitation under section 275(1)(c): time-bar rendered the section 271D order unsustainable.

Penalty under section 271D must be passed within the limitation period in section 275(1)(c), applying the later of the prescribed time limits. On the facts stated, the penalty notice was issued on 7 April 1993, making 31 March 1994 the relevant completion date. The penalty order passed on 31 October 1997 was therefore beyond the statutory period and time-barred. The article also notes that the alleged contravention of section 269SS could not sustain the penalty once limitation had expired.

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

Analysis: The notice initiating penalty proceedings was issued on 7 April 1993, so the relevant financial year ended on 31 March 1994 and the six-month period from the end of the month of initiation expired earlier. Under section 275(1)(c), the later of the two prescribed limits had to be applied, which in the facts of the case meant completion by 31 March 1994. The penalty order passed on 31 October 1997 was therefore far beyond the statutory period. The challenge to the penalty under section 271D for the alleged contravention of section 269SS could not succeed because the order was time-barred.

Conclusion: The penalty order was barred by limitation and was rightly set aside.

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