The assessee was a director in two companies which exported garments and had their registered offices in Delhi. On the basis of a warrant of authorization issued on February 5, 2019 under section\u00a0132(1)\u00a0of the\u00a0Income-tax Act, 1961\u00a0against a third party group a search was conducted at the assessee\u2019s residence from February 6, 2019 to February 9, 2019. During this search, besides some loose papers, a hard disk, a digital video recorder, a key to a bank locker were seized and the statements of the assessee and his wife were recorded. Thereafter, a warrant of authorisation was issued on February 12, 2019 against the assessee and his wife for a search of the bank locker from wherein jewellery was seized. On February 25, 2019, a look out circular was issued against the assessee on the grounds that he had undisclosed foreign assets and interests in foreign entities liable for penalty and prosecution under the 1961 Act, the\u00a0Black Money (Undisclosed Foreign Income and Assets) and Imposition of tax Act, 2015\u00a0and the\u00a0Prevention of Money-Laundering Act, 2002. In the meanwhile, on April 4, 2019 the search operation at the assessee\u2019s residence resumed under the initial warrant of authorisation issued on February 5, 2019, and continued till April 5, 2019, when after recording the assessee\u2019s statement, a final panchnama was drawn up. The assessee\u2019s requests for being provided with copies of the seized documents and the statements recorded during the search were not acceded to. On April 20, 2019, proceedings under the 1961 Act for the assessment for the financial years 2018-19 and 2019-20 were initiated against the assessee which culminated in two orders by which additional income was assessed against which appeals of the assessee were pending. The writ petition filed by the assessee challenging the search conducted in his residence and bank locker was dismissed by the court holding that the search actions conducted at the assessee\u2019s residence and locker were justified. Upon learning about the issuance of the look out circular against him, the assessee sought withdrawal thereof through representations and also submitted an affidavit, deposing therein that neither he nor any of his family members held any foreign accounts or any undisclosed assets and enclosed supporting certificates issued by the Government of Dubai. Thereafter, on August 6, 2019 the assessee filed an application before the Additional Chief Metropolitan Magistrate seeking to quash the look out circular. The Additional Chief Metropolitan Magistrate suspended the operation of the look out circular, subject to certain conditions and granted permission to the assessee to travel abroad except to the United Arab Emirates. Against this order, the respondents filed a revision petition before the Additional District Judge and the petition was allowed holding that since the assessee was neither a complainant nor an accused nor a witness in any matter pending before the Additional Chief Metropolitan Magistrate, the order suspending the look out circular was without jurisdiction. On a writ petition, allowing the petition, the Court held\u00a0 that merely because the office memorandum dated December 5, 2017 permitted the issuance of a look out circular, in exceptional circumstances, even when the individual was not involved in any cognizable offence under the\u00a0Indian Penal Code, 1860\u00a0or any other penal law, such power was meant to be used in exceptional circumstances and not as a matter of routine. It must therefore, be interpreted in a manner that indicated an offence of such a magnitude so as to significantly affect the economic interests of the country. Mere suspicion of a person opening bank accounts in other countries and of investing in a foreign company could not be the basis for holding that the assessee being allowed to travel abroad would be \u201cdetrimental to the economic interests of India\u201d, when it was undisputed that this suspicion had remained a suspicion for almost three years. In the light of the adverse effects that the issuance of a look out circular could have on the individual\u2019s life, the respondents\u2019 plea that the court in its jurisdiction under article 226 should not examine the legality of the look out circular and review the decision to issue the look out circular could not be accepted. The continuance of the look out circular for almost three years without any cogent reasons forthcoming from them, was impermissible, and the respondents were not entitled to continue placing fetters on the assessee\u2019s right to travel abroad in such a routine and mechanical manner without due consideration of the fact that even after almost three years there was still no sufficient evidence to charge the assessee under any penal law. The assessee earned his livelihood through export business and an integral part of such business was overseas travel. The look out circular not only curtailed his right to personal liberty but also his right to livelihood, as enshrined in article\u00a021. Therefore, the issuance of a look out circular against the assessee without any end in sight would definitely cause irreparable and considerable damage to the business interests of the assessee. The look out circular and the extension thereof were quashed, with a direction to the assessee to intimate respondent No. 3 as and when he departed from or entered the country for the next one year.<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 132 : Search and Seizure-Right to livelihood-Issuance of look out Circular on mere suspicion that assessee had bank accounts and investments in other countries-Cannot be basis for holding that assessee being allowed to travel abroad would be detrimental to the economic interests of India-Absence of proceedings under any penal law being initiated against assessee at relevant point of time \u2014Indefinite continuance of look out circular on mere suspicion-Infringement of right to livelihood [Black Money (Undisclosed Foreign Income and Assets) and Imposition of tax Act, 2015 and the Prevention of Money-Laundering Act, 2002. The Indian Penal Code, 1860, Art. 21, 226] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-28247","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-7lB","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/28247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=28247"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/28247\/revisions"}],"predecessor-version":[{"id":28248,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/28247\/revisions\/28248"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=28247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=28247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=28247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}