Extended limitation period upheld for pre-August 1996 suppression, where departmental knowledge arose only after investigation.

The extended period of limitation was held applicable for the period before August 1996 because suppression of facts was established only after investigation and recording of statements brought the assessee's activities to light. The Tribunal correctly treated the department's knowledge as arising only from August 1996, so the absence of suppression after that date did not affect the earlier period. The factual basis for invoking the extended period therefore differed between the two periods, and the limitation finding for the pre-August 1996 period was upheld in favour of the Revenue.

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Issues: Whether the extended period of limitation could be invoked for the period prior to August 1996 on the ground of suppression of facts, notwithstanding the Tribunal's finding that suppression could not be sustained for the period after August 1996 when the department had knowledge of the relevant activities.

Analysis: The Court held that the Tribunal had correctly distinguished the two periods on the basis of the department's knowledge. The assessee's activities came to light only after investigation and recording of statements in August 1996, so suppression was established for the earlier period. The absence of suppression after August 1996 did not compel the same result for the prior period, because the factual basis for departmental knowledge had arisen only later. The Tribunal's reasoning on limitation was therefore found to be supported by the record.

Conclusion: The extended period of limitation was validly invoked for the period prior to August 1996, and the finding was in favour of the Revenue and against the assessee.

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