In Brief
In this income tax appeal, the Supreme Court upheld the High Court's decision that block assessment proceedings against two finance companies did not become time-barred despite expiry of the statutory two-year limitation period. The Court held that when an assessing officer directs special audit as an integral step in assessment under Section 142(2A), a court order staying that audit effectively stays the assessment proceedings for limitation purposes. The interim stay on special audit (granted 24 August 2000 through 15 December 2006) therefore excluded the litigation period from the limitation calculation. The Court also held the limitation period ran from 5 August 1998 (final search date) not 22 June 1998 (initial search), making the deadline 31 August 2000, after the interim stay commenced. Appeal dismissed.
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