2020 (2) TMI 793 - HC - Income Tax

Seeking withdrawal of the Look Out Circular (LOC) - Income tax inquiry proceedings against the Chartered Accountant (CA) in the matter of Punj Lloyd Group - the allegation is that, it is the petitioner who had arranged the entities that raised bogus bills for M/s Punj Lloyd Limited in the middle east - HELD THAT - The petitioner is not an employee of M/s Punj Lloyd Limited as stated by the petitioner and not denied by the respondents. It is also not the case that the petitioner is not joining the investigation or that he has not co-operated during the investigation, rather according to the respondents he has even made some admissions during the course of the investigation and recording of his statements. The issuance of the LOC is a serious matter as it contains full particular of the individual which are sent throughout the world. Therefore, keeping in view the above said facts and circumstances, there is no justification in keeping the present LOC alive. The same is, therefore, directed to be recalled by the issuing authority. The following conditions are imposed on the petitioner (a) That he shall join the investigation as and when called by the investigating officer. However, the investigating officer shall give him atleast 7 days prior notice. (b) That he shall co-operate in the investigation. (c) That in case the petitioner is proposes to travel beyond Dubai, he shall furnish details of the country (ies) with his complete itinerary to the investigating officer. In case of violation of the above conditions imposed on the petitioner, the respondents will have the liberty to approach this Court.

Summary

Issues:
Withdrawal of Look Out Circular (LOC) against the petitioner.

Analysis:
The petitioner, a chartered accountant working in Dubai, sought withdrawal of the LOC issued against him. The petitioner frequently visited India for personal and business reasons. On his visit in January 2020, he was approached by Income Tax officers regarding an investigation related to Punj Lloyd Group. The petitioner cooperated with the investigation, and the respondents alleged that he facilitated tax evasion by arranging entities to raise bogus invoices for Punj Lloyd Limited. The respondents initiated LOC proceedings against the petitioner under the Black Money And Imposition of Tax Act, 2015. The petitioner's statement was recorded, where he admitted to his involvement in the transactions. The petitioner argued that he is an Indian citizen with no intention of fleeing and cooperated fully with the investigation.

Legal Precedents:
The respondents argued that the allegations against the petitioner were grave, citing a case precedent "Piyoosh Kumar Goyal Vs. Union of India & Ors." The court noted that the petitioner's case did not match the facts of the precedent, as the petitioner had cooperated with the investigation and was not evasive. The court also referenced a Madras High Court case listing categories of individuals for LOC, none of which applied to the petitioner.

Judgment:
The court found no justification to keep the LOC active against the petitioner. The court directed the recall of the LOC, imposing conditions on the petitioner to cooperate with the investigation, provide travel details if leaving Dubai, and give prior notice before joining the investigation. Any violation of these conditions would allow the respondents to approach the court. The court disposed of the petition and related criminal miscellaneous application, clarifying that its observations would not impact the case's merits.