Court quashes Look Out Circular due to lack of review, orders cancellation. Petitioner's cooperation acknowledged.

The court quashed the Look Out Circular (LOC) issued against the Petitioner, citing non-compliance with the Office Memorandum requiring periodic review. Despite the Petitioner's cooperation in the investigation and payment of 20% of the demand, the LOC remained in effect since 2019 without proper review. With no prosecution initiated and assessment orders challenged, the court found the LOC unjustified and ordered its cancellation, directing the Respondent to inform immigration authorities accordingly.

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Issues Involved:
1. Quashing of Look Out Circular (LOC) issued against the Petitioner.
2. Compliance with Office Memorandum regarding LOC.
3. Status of prosecution under the Income Tax Act and Black Money Act.

Summary:

Issue 1: Quashing of Look Out Circular (LOC)
The Petitioner sought the quashing of the LOC issued against him following a search and seizure operation conducted by the Income Tax department on 1st November 2019. The LOC was issued post this operation, and despite the Petitioner complying with the summons and recording his statement, the LOC continued to be operational. Assessment orders were passed for AYs 2014-15 to 2020-21, raising a total demand of Rs. 9,21,82,365/-. The Petitioner challenged these orders before the CIT (Appeals) and paid 20% of the demand as per CBDT guidelines, which should have stayed the demand.

Issue 2: Compliance with Office Memorandum regarding LOC
The Petitioner argued that the LOC should be quashed due to non-compliance with the Office Memorandum, which mandates periodic review of the LOC. The Petitioner highlighted that no FIR or prosecution had been initiated under the Income Tax Act or Black Money Act, and the conditions for continuing the LOC were not met. The Office Memorandum requires that LOCs be reviewed quarterly and annually, and if the person is no longer wanted, the LOC should be deleted. The Respondent failed to demonstrate that such reviews were conducted.

Issue 3: Status of prosecution under the Income Tax Act and Black Money Act
The Respondent argued that prosecution could be launched under both the Income Tax Act and Black Money Act, citing the potential for the Petitioner to evade tax and penalties. However, it was conceded that no sanction for prosecution had been granted under Section 279 of the IT Act. The court noted that certain offences under the IT Act are non-cognizable, and no notice for prosecution had been issued to the Petitioner.

Conclusion:
The court considered the following facts: the Petitioner's participation in the investigation, completion of assessment, payment of 20% of the demand, conclusion of proceedings under the Black Money Act, and the absence of any prosecution. The LOC had been continued since 2019 without review, violating the Office Memorandum. Consequently, the court quashed the LOC, allowing the petition and directing the Respondent to inform immigration authorities of the order. The petition and all pending applications were disposed of accordingly.

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