Block assessment time limit treated as directory, with limited extension granted and limitation challenge preserved.

Section 158BE of the Income-tax Act was treated as directory in the context of a block assessment involving inquiry into undisclosed income. Because the assessment required detailed examination of material after the assessee had returned nil undisclosed income and withdrawn earlier admissions, the Court granted a limited extension of three months to complete the assessment. The extension was confined to the facts of the case, with a caution that repeated extensions would not be granted. The assessee's right to later contest the assessment on limitation grounds was expressly preserved.

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Issues: Whether the time prescribed for completion of block assessment under section 158BE of the Income-tax Act, 1961, could be extended in the facts of the case and whether the assessee could later challenge the assessment on the ground of limitation.

Analysis: The assessment involved block years and required detailed inquiry into undisclosed income after the assessee had returned nil undisclosed income and had retracted from earlier admissions. In view of the magnitude of the inquiry and the material showing the Department's efforts, the Court found it to grant limited additional time. At the same time, the Court expressly protected the assessee's right to contest the assessment on limitation grounds and cautioned that frequent extensions would not be granted.

Conclusion: The time for completing the block assessment was extended by three months. Section 158BE was treated as directory, and the assessee retained the right to challenge the assessment on the ground of limitation.

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