The Army Cap is a feature designed to help prevent games from falling into stalemates where no players want to attack.
When a game creator enables the Army Cap, your income could be reduced to prevent you from piling up too many armies. This is designed to force players to either attack to gain additional income, or risk falling behind by not receiving new armies.
For example, if your income is 14 and the Army Cap is set at 20, the total number of armies you can have is 280 (14 times 20). If you reach 280 armies on the board, you will no longer receive new armies until you either increase your income or reduce the number of armies you have on the board.
Reinforcement cards do not count as income and will always give you the number of armies that they normally would.
It's possible to have more armies on the board than the Army Cap allows, either through losing income or by playing reinforcement cards. Armies are never taken away from you - in this situation you just simply wouldn't gain additional armies to deploy until you reduce your total armies or your income increases.