Court withdraws Look Out Circular against Dubai-based chartered accountant in tax evasion case

The court ordered the withdrawal of the Look Out Circular (LOC) against the petitioner, a chartered accountant working in Dubai, due to lack of justification to keep it active. The petitioner cooperated with the investigation into alleged tax evasion by arranging entities to raise bogus invoices for Punj Lloyd Limited. The court found that the petitioner, an Indian citizen with no intention of fleeing, had cooperated fully and did not match the severity of the cited case precedent. The court imposed conditions on the petitioner for recall of the LOC, emphasizing cooperation with the investigation and providing travel details if leaving Dubai.

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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.

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