Limitation under Rule 68B can bar auction of attached properties where recovery proceedings appear time-barred.

Interim stay of an auction of attached properties was granted where the recovery action appeared prima facie to be time-barred under Rule 68B of the Second Schedule to the Income-tax Act. The petitioners argued that the auction could not proceed because the recovery proceedings were initiated after the prescribed limitation period had expired. The department contended that limitation should run only from the later computation and demand of interest, but that contention was not accepted at the ad interim stage. The court noted that the proceedings appeared to relate to earlier assessment years and had been taken up after several years.

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Issues: Whether the proposed auction of the attached properties could be stayed at the interim stage on the ground that it appeared to be barred by limitation under Rule 68B of the Second Schedule to the Income-tax Act.

Analysis: The petitioners challenged the auction on the footing that the recovery proceedings were initiated after the lapse of the period prescribed in Rule 68B. The department contended that limitation would run only from the later computation and demand of interest. On a prima facie view, the proceedings appeared to have been taken up after several years in respect of dues relating to earlier assessment years, and the contention that limitation commenced only upon the interest computation was not accepted at this stage.

Conclusion: Ad interim stay of the auction was granted.

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