NRI's Look Out Circular quashed for Rs 1400 crore foreign asset evasion case due to indefinite continuation without valid reasons

Delhi HC quashed a Look Out Circular against an NRI petitioner issued for alleged evasion of Rs. 1400 crores in undisclosed foreign assets and income through offshore structures. The court held that LOCs cannot continue indefinitely without valid reasons. Since the petitioner had not been summoned for investigation since March 2022, had cooperated with authorities, and right to travel abroad is a fundamental right under Article 21, the LOC was quashed subject to conditions to ensure the petitioner's presence when required for future investigations.

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Issues Involved:
1. Validity of the Look Out Circular (LOC) against the Petitioner.
2. Compliance with summons and cooperation with the investigation.
3. Petitioner's right to travel abroad under Article 21 of the Constitution of India.

Summary:

1. Validity of the Look Out Circular (LOC) against the Petitioner:
The Petitioner challenged the LOC dated 22.01.2020 issued by the Deputy Director, Income Tax (Investigation). The LOC was based on allegations that the Petitioner, an NRI living in Dubai, assisted the Suri Family in evading disclosure of Rs. 1400 crores in undisclosed foreign assets/income. The Respondents argued that the Petitioner was involved in offences under the Prevention of Money Laundering Act, 2002, and the Black Money Act, and his presence was necessary for ongoing investigations.

2. Compliance with summons and cooperation with the investigation:
The Petitioner complied with multiple summons issued by the IT Department, with the last summon issued on 12.03.2022. The Court noted that the Petitioner had not been summoned since then and had cooperated with the investigation. The Respondents failed to provide cogent reasons for continuing the LOC, especially since the investigation had been ongoing for over three years.

3. Petitioner's right to travel abroad under Article 21 of the Constitution of India:
The Court emphasized that the right to travel abroad is a fundamental right under Article 21, which cannot be arbitrarily curtailed. The Court referred to previous judgments and Office Memoranda regulating the issuance of LOCs, highlighting that LOCs should only be issued in exceptional circumstances involving serious offences. The Court found no valid reason to continue the LOC against the Petitioner, especially since the Petitioner had not been called for investigation for the past two years.

Conclusion:
The Court quashed the LOC against the Petitioner, imposing the following conditions to ensure the Petitioner's presence in India:
a. Furnish security of Rs. 10 crores or above, or a fixed deposit of the same value.
b. Furnish liquid security of Rs. 1 crore.
c. Not dispose of properties furnished as security without prior leave of the Court.
d. Provide the entire travel itinerary to the Investigating Officer and adhere to it.

The Writ Petition was disposed of, with the Court allowing the Respondents to open a fresh LOC if any conditions were breached.

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