Delhi HC quashes Look Out Circular against Delhi businessman

New Delhi [India], January 12 (ANI): The Delhi High Court on Wednesday ordered the quashing of a Look Out Circular (LOC) issued by the Union Home Ministry against Delhi-based businessman Vikas Chaudhary at the instance of the Income Tax department.
A bench of Justice Rekha Palli on Wednesday while passing the judgement stated, "in the present case, no proceedings under any penal law have, in fact, been initiated against the petitioner. These decisions are, therefore, clearly distinguishable and do not, in any manner forward the case of the respondents".
Court further added, "the LOC is wholly unsustainable and deserves to be quashed. However, keeping in view the Income Tax Department's plea, that it is still awaiting inputs from the authorities at Dubai, upon receipt of which information, cases under various penal laws are likely to be initiated against the petitioner, I am of the view, that it would be in the interest of justice for the petitioner to inform Income Tax Department, as and when he decides to leave the country, for the next one year."
During the arguments, the court noted that on the basis of a Warrant of Authorization (WoA) issued on February 5, 2019, under section 132(1) of the Income Tax Act against a third party, namely 'The Kochar Group' comprising inter alia of Avtar Singh Kochar, Gagandeep Singh Kochar, Hari Singh Kochar and M/s HL Impex (P) Ltd, a search action was conducted at the petitioner's residence from February 6 to 9 in 2019.
During this search, besides some loose papers, a hard disk, a digital video recorder, a key to the locker of a bank was also seized and as per procedure, the statements of both the petitioner and his wife were recorded.
A WoA was thereafter, issued on February 12, 2019, against the petitioner and his wife for a search of the aforesaid locker, which led to the seizure of jewellery worth about Rs 1,00,67,181 found in the locker and on a request made by the income tax department to the Ministry of Home Affairs on February 25, 2019, the impugned LOC came to be issued against the petitioner.
Vikas Pahwa, Senior counsel appeared for the petitioner submitted that the impugned LOC having been issued on the basis of a mere suspicion that the petitioner owns undisclosed foreign assets and has interests in foreign entities is liable to be set aside on this ground alone
He also submitted that despite repeated search actions having been conducted at the petitioner's residence, first in February 2019 and then in April 2019, no case, either under the Black Money (Undisclosed foreign income and assets) and Imposition of Tax Act, 2015 or under the Prevention of Money Laundering Act, 2002, or even under the Income Tax Act 1961, had been registered against him till date.
Senior Advocate Vikas Pahwa submitted the issuance of the LOC on February 25 in 2019 and its continued operation for almost three years, especially in the absence of the registration of any cognizable offence or criminal complaint against the petitioner is ex facie illegal, even more so when it is evident that he has been complying with all the notices and summons issued to him by appearing before the Income Tax Department on 19 separate occasions (16 times pre-issuance of LOC, and 3 times post-issuance).
According to the petition, the petitioner businessman is a director in two companies, namely M/s Nautilus Metal Crafts Pvt. Ltd. and M/s Aastha Apparels Pvt. Ltd. has their registered offices in Delhi. It is claimed that the two companies are in the business of exporting garments to the USA Europe, South America, the UK and the UAE, and based on their performance are the recipients of various certificates and awards from the Government including a "Two Star Export House Status" and an"Authorized Economic Operator T-1 Certificate". (ANI)