Court sets aside order, emphasizes evidence and CCIT approval for Tax Clearance Certificate. Section 230(1A) requirements noted.

The court set aside the impugned order dated 18.10.2019, finding it unjustified based on available material. The writ petition was allowed, emphasizing the necessity for tangible evidence and proper CCIT approval for requiring a Tax Clearance Certificate under Section 230(1A). The court also noted the absence of Section 230's applicability to proceedings under the Black Money Act, suggesting legislative amendment if required.

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Issues Involved:
1. Challenge to the order under Section 230(1A) of the Income Tax Act, 1961.
2. Validity of the requirement for a Tax Clearance Certificate (TCC) under Section 230(1A).
3. Examination of the circumstances justifying the issuance of a Look-out Circular (LOC).
4. Proper authority for granting approval under Section 230(1A).
5. Applicability of Section 230 to proceedings under the Black Money Act, 2015.
6. Adequacy of reasons provided in the impugned order.

Issue-wise Detailed Analysis:

1. Challenge to the order under Section 230(1A) of the Income Tax Act, 1961:
The petitioner challenged the order dated 18.10.2019 under Section 230(1A) of the IT Act, which required obtaining a TCC before leaving India. The court noted that the petitioner had approached the respondent for a TCC, which was denied based on the search and seizure operation revealing substantial unaccounted assets. The court found that the petitioner had not adequately engaged with the respondent to resolve the issue before approaching the court.

2. Validity of the requirement for a Tax Clearance Certificate (TCC) under Section 230(1A):
Section 230(1A) requires individuals domiciled in India to obtain a TCC if circumstances, in the opinion of the income-tax authority, necessitate it. The court emphasized that the provision aims to protect revenue interests by preventing individuals with potential tax liabilities from leaving the country without ensuring tax payments. The court highlighted that the provision is intended for cases where there is a tangible risk of tax evasion.

3. Examination of the circumstances justifying the issuance of a Look-out Circular (LOC):
The court examined the circumstances under which an LOC can be issued, as outlined in the Ministry of Home Affairs guidelines and relevant case law. The court noted that an LOC is a coercive measure used when there is a clear intention or possibility of the accused absconding to evade trial or investigation. In this case, the search and seizure operation revealed substantial unaccounted assets, which justified the issuance of the LOC to prevent the petitioner from leaving the country.

4. Proper authority for granting approval under Section 230(1A):
The petitioner argued that the approval for the TCC requirement should have been obtained from the Chief Commissioner of Income Tax (CCIT) and not the Director General of Income Tax (DGIT). The court agreed, noting that Section 230(1A) specifically requires approval from the CCIT. The court emphasized that the roles of CCIT and DGIT are distinct and not interchangeable, and the statutory mandate must be followed.

5. Applicability of Section 230 to proceedings under the Black Money Act, 2015:
The court examined whether Section 230 of the IT Act applies to proceedings under the Black Money Act, 2015. The court noted that Section 84 of the Black Money Act lists specific provisions of the IT Act that apply to it, but Section 230 is not included. The court concluded that Section 230 does not apply to proceedings under the Black Money Act, highlighting the need for legislative amendment to include it if deemed necessary.

6. Adequacy of reasons provided in the impugned order:
The court emphasized that the reasons for requiring a TCC must be based on tangible material indicating a risk of tax evasion or non-cooperation. The court found that the reasons recorded in the impugned order were insufficient, as they primarily referred to the substantial assets found during the search without providing specific circumstances justifying the TCC requirement. The court stressed that the satisfaction of the authority must be based on concrete evidence and not mere assumptions.

Conclusion:
The court set aside the impugned order dated 18.10.2019, finding that it was not justified based on the material available. The court allowed the writ petition, emphasizing that the reasons for requiring a TCC under Section 230(1A) must be based on tangible evidence and proper approval from the CCIT. The court also highlighted the need for legislative amendment to include Section 230 in the Black Money Act, 2015, if deemed necessary.

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