Why does chlorination of toluene stop at two chlorine atoms? My instructor mentioned a reaction for preparation of benzaldehyde by chlorination of toluene in presence of sunlight to form benzal dichloride, which on hydrolysis gives benzaldehyde. 

However, I'm not sure why the chlorination of side chain should stop after two chlorine atoms are added? At what step does the side chain chlorination of toluene stop?
It doesn't stop, it just gets a lot slower the more chlorine atoms you add. From the abstract of an article titled Photochemical side-chain chlorination of toluene[1]:


  Where $k_1$, $k_2$, and $k_3$ are the rate consts. for the successive reactions: $\ce{PhMe}$ → $\ce{PhCH2Cl}$ → $\ce{PhCHCl2}$ → $\ce{PhCCl3}$, resp.; $r = \frac{k_1}{k_2}$ and $s = \frac{k_2}{k_3}$, values of $r$ and $s$, resp., were 6.0 and 5.7 at 100° and 8.4 and 8.5 at 40°, for batch operation, with light varying from ultraviolet to yellow.




[1] Haring, I. H. G.; Knol, H. W. Chemical and Process Engineering (London) 1964, 45 (10), 560–567.