TaxTMI 
TaxTMI 
2022 (9) TMI 1101
X X X X Extracts X X X X
X X X X Extracts X X X X
....posed thereby to the effect that in case of resignation, retirement or cessation of employment etc. of the respondent herein from the company M/s Huawei Telecommunications (India) Company Private Limited (HTICPL) (hereinafter referred to as the Company, of which the respondent herein was stated to have been the CEO), was directed to withhold the Severance Pay/Severance Package and other incentives/emoluments payable to respondent herein, which were directed not to be released without prior permission of the learned Trial Court, and an undertaking to this effect was directed to be submitted by the respondent from the said company to be filed with the Court under intimation to the Deputy Director of Income Tax (Inv) Unit-4(3), Delhi, i.e., the petitioner herein, with it having been directed that on filing of the said undertaking, the DDIT (Inv) Unit-4(3), Delhi was directed to take appropriate steps for withdrawing the lookout circular against the applicant and the same was directed to be withdrawn/recalled within 7 days of filing of the undertaking by the applicant. The respondent, in terms of the impugned order dated 29.08.2022 of the Court of the learned ACMM, Special Act, Central....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of traded goods 2764,77,23,624 2017-18 Purchase of raw materials 247,79,37,325 Purchase of traded goods 6355,36,91,426 2018-19 Purchase of raw materials 191,10,18,161 Purchase of traded goods 6696,63,55,915 5. The petitioner has also put forth through the petition a summary of the profit margin of the relevant segment of the petitioner, the revenue base on which the profit margin has been calculated and the profit margin of the comparables, which is to the effect:- FY Profit margin of the relevant segment of the petitioner Revenue base on which the profit margin has been calculated Profit margin of the comparables 2015-16 17.18% 3376,88, 90,268 2.79% to 8.83% 2016-17 8.84% 5991,48,75,777 4.21% 2017-18 4.62% 7828,34,20,471 4.83% 2018-19 10.12% 8196,67, 57,755 2.10% to 8.74% Total 25393,39,44,271 6. The petitioner submits that the Search and Seizure action u/s 132 of the Income Tax Act , 1961 was conducted on 15.02.2022 in the case of 'the Company' and another group company M/s Huawei Technologies India Pvt. Limited, Bengaluru, and that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding that the economic security of the State could be adversely affected if the relevant Look Out Circular was not issued. The petitioner has submitted further that since the CFO was not present in India, the CEO, being the officer of the company responsible for providing the books of accounts and other details, would be required to be present in India for facilitating determination of taxable income of the company, and thus a Look Out Circular was issued against the respondent herein because of his conduct during the course of the Search Action demonstrated that he was a flight risk and that he did not wish to cooperate with the investigation proceedings at hand. 11. Inter alia, the petitioner submits that it made continuous efforts for the next few days to get meaningful details from various key personnel regarding Books of Accounts, E-mails and Messenger but the same was stone walled by the Company wherein the respondent is the Chief Executive Officer, under a design to thwart lawful investigations being conducted by the complainant, and thus after examining the response of the company to the show cause notice, a complaint for launching of prosecution u/s 275B of the Income T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st April, 2022, the Petitioner shall prepare another Fixed Deposit Receipt of Rs.100 crores in Axis Bank Account No. 919020017328222, which shall be renewed automatically from time to time. A photocopy of the said FDR shall be filed with the Assessing Officer within a week. The Banker is also directed to ensure that the Petitioner and/or any of its officials/ nominees/ authorised representatives do not deal with the FDR in any manner. There shall be a lien in favour of the Department with respect to both the FDRs till conclusion of the assessment proceedings and thereafter the amount will be dealt in accordance with law. The Bankers will issue a letter to the AO acknowledging the lien in favour of the Department. (ii) The Respondents are directed not to release any refund [which is stated to be to the tune of Rs.30 crores (approx.)] to the Petitioner till the assessment proceedings are completed and thereafter the refund shall be dealt with in accordance with law. (iii) The Respondents are directed to complete the assessment as expeditiously as possible. The parties will be at liberty to apply to this Court to seek a variation of this order. (iv) The Peti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....07.2022 of the Hon'ble Division Bench of this Court in the said W.P (C) 8048/2022 filed by the respondent herein seeking the cancellation of the Look Out Circular issued against him (which is the subject matter of the present petition also now), it is clarified that the Division Bench had not commented on the merits of the controversy and that the rights and contentions of all the parties were left open. The said order is as under:- "Learned counsel for the Petitioner in the present proceedings confines his prayer to quashing of the Lookout Circular issued against the Petitioner by Respondent No.1. The Respondent no.1 in its counter affidavit has averred as under:- "20 ... Furthermore, the prosecution complaint has already been filed and Ld. ACMM, Tis Hazari Court, Delhi has already summoned the petitioner to appear before the Hon'ble Court. Considering the same, the Petitioner may now approach the Ld. Trial Court with regards to bail and travel conditions of the Petitioner. xxxx xxxx xxxx xxxx 43. That, the contents of Ground B6 are denied. It is again reiterated that, the prosecution has filed a complaint before Ld. ACMM and on the said complai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....income chargeable to tax. During the course of search, applicant Xiongwei Li deliberately did not comply with the provisions of sub section (1) of section 132 of The Act. The officers of ITO were not given adequate facility and co-operation for inspection of books of accounts. Even the documents sought by the officers of ITO were not supplied by the applicant and other personnel of the company. The statement of the applicant was recorded u/s 132 (4) of The Act and apparently, the applicant deliberately chose to give vague answers to some of the questions, eflorts were made to confuse the authorized sate officers conducting the search. The answers given by the applicant and the other employees of the company were incongruous to each other. Unnecessarily long time was sought by personnel of the company to furnish documents which otherwise ought to have been readily available with the company. The applicant is the CEO of the company but he did not comply with the directions issued by the officers of ITO. A complaint case was filed by the ITO against the company and its personnel (including the applicant) alleging commission of offence punishable u/s 275B r/w section 278B of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....circular is withdrawn then the applicant being a Chinese national may leave India and never come back, thereby jeopardizing not only the proceedings in complaint case but also adversely affecting the investigation being conducted by the IT. He submitted that the application be dismissed being devoid of merit. In compliance of an order passed by this court, the ITO placed on record (in closed envelope) copy of the letter written to the authority concerned for issuance of look out circular, the proforma for issuance of LOC and the proposal for issuance of LOC. Submissions of the ld. SPP for (TO and Id. counsel for the applicant were heard at length on previous occasions. Entire material available on record has been perused. My observations on the application are delineated hereinafter. The investigation regarding the search u/s 132 of The Act conducted at the office of the company is still in progress. No doubt, the complaint filed by the ITO before this court is for commission of offence punishable u/s 275 B read with 278B of The Act which is a non-cognizable and bailable offence. Except these two proceedings, no other criminal proceeding exists on date wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... can only be issued by investigating agency in case of cognizable offences under IPC or other penal laws on fulfilment of two conditions; (i) where the accused was deliberately not appearing before the court despite issuance of NBWs and other coercive measures or he was deliberately evading arrest, and (ii) there was likelihood of accused leaving the country to evade trials/arrests. Both these conditions are cumulative. Since, the complaint pending against the applicant is for commission of non-cognizable offence, therefore, the LOC could not have been issued citing that complaint. Moreover, no coercive process was issued against the applicant by this court, rather a summon for appearance was ordered to be issued. Perusal of letter written to the authority concerned by officer of ITO for issuance of LOC against applicant shows that the officer was of prima facie view that commission of other offences under the Act was disclosed and thorough investigation was required to be conducted. The applicant being the CEO of the company would be required to appear before the investigating officer for purpose of investigation. The reason for issuance of LOC seems to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from the search conducted on 15.02.2022. As such, legal proceedings are likely to take a long time to conclude. It has already been six months since the issuance of letter of request for opening of LOC against applicant and the investigation appears to be nowhere near completion. There is a likelihood that the applicant may leave India on the pretext of some business meeting or any personal work and may never come back but this possibility of absconding is always there whenever any person is admitted to bail in any criminal case. In Rana Ayyub v. Union of India & Anr. W.P.(CRL)714/2022 decided on 04.04.2022 the High Court of Delhi quashed the LOC as there was no cogent reason to presume that the petitioner would not appear before the investigating agency. The applicant is also entitled to equality before the law. The applicant cannot be treated differently solely on the ground of his nationality and cannot be restricted from international travel by issuance of LOC, when Indian Nationals facing legal proceedings in more serious offence are allowed to travel outside India. The company is not a fly by night operator and considering the fact that it generates considerable rev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of resignation, retirement or cessation of employment etc. of the applicant, the company shall withhold the Severance Pay/Severance Package and other incentives/emoluments payable to applicant and the same shall not be released without prior permission of this court. An undertaking to this effect shall be procured by the applicant from the company and the same shall be filed with this court under intimation to Deputy Director of Income Tax (Inv) Unit- 4(3), Delhi. Upon filing of undertaking, DDIT (Inv) Unit4(3), Delhi shall take appropriate steps for withdrawing the lookout circular against the applicant and the same shall be withdrawn/recalled within 7 days of filing of undertaking by the applicant. The application stands disposed of. Copy of this order be given dasti, free of cost to both the parties." 20. The petitioner has submitted that the OMs under which the LOC had been issued are not under consideration nor under challenge and that in terms of the verdict of this Court in "Sumer Singh Salkhan v. Asst. Director and Ors." ILR (2010) Del 706, an LOC can be issued by an investigating agency in cognizable offences where the accused is deliberately evadin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the basis of the materials disclosed on affidavit, the economic interest of India is so involved and whether the actions are taken in accordance with law or not. The petitioner has thus, placed reliance on the verdict of the Hon'ble High Court of Madras in "S. Martin v. Deputy Commissioner of Police" 2014 SCC Online Mad 426 with specific observations in paragraphs 24, 26 and 45 thereof, which read to the effect:- "24. The Learned Public Prosecutor for the Respondents contends that the Petitioner/A2 is often to leave the jurisdiction without permission from the Investigating Officer and when the investigation of the case in Crime No. 304 of 2012 is pending, there is a reasonable apprehension on the part of the Petitioner that he may tamper the material witnesses. ... 26. Added further, it is the pivotal contention of the Learned Public Prosecutor for the Respondents that as per Guideline No. 8(j) laid down in the Office Memorandum dated 27.10.2010 issued by the Government of India, Ministry of Home Affairs, (Foreigners Division) that 'In exceptional cases, LOCs can be issued without complete parameters and/or case details against CI suspects, terrorists, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed opinion of this Court. Certainly, the Respondents can take recourse to the issuance of LOC to prevent likelihood of the Petitioner/A2 leaving the country to evade trial. After all, the said LOC is nothing but coercive tool enabling the Petitioner either to surrender before the Investigating Agency or to co-operate with the Investigating Agency in regard to the pending completion of investigation in Crime No. 304 of 2012. Further, the Petitioner/A2 comes within the ambit of the term 'exceptional case/cases' and therefore, there is no impediment in law for the concerned authorities to issue LOC against him without complete parameters.", to submit to the effect that even during pending investigation, the LOC was upheld by invoking the category of exceptional circumstances submitting to the effect that the said case was a case where the petitioner was arrayed as an accused for dealing in lottery tickets which were banned in Tamil Nadu and for keeping the unaccounted and unlawfully acquired money. 23. The petitioner has further placed reliance on the verdict of the Division Bench of the Hon'ble High Court of Allahabad in "GSC Rao v. State of UP" (2019) 106 ACC....
X X X X Extracts X X X X
X X X X Extracts X X X X
....adherence to his undertaking. It has been submitted on behalf of the petitioner that this verdict was upheld by a Division Bench of the Hon'ble Madras High Court in "C. Sivasankaran v. Foreigner Regional Registration Officer and Ors." 2020 SCC Online Mad 2656 wherein it was held to the effect:- "17. In our opinion, the issuance of a Look Out Circular is an exercise of authority under the Office Memorandum dated 27.10.2010 and such a circular can be issued in larger public interest, as already held by the Ld. Single Judge after taking into account the amendment in the said memorandum." 26. The petitioner has further placed reliance on the verdict of the Hon'ble High Court of Bombay in "Suman Gupta v. Union of India and Ors." in WP (Crl.) 1313/2020, to submit to the effect that in that case, the petitioner thereof had sought to travel abroad for medical treatment and it was held therein that a LOC would not be quashed where there are allegations of economic offences of a serious nature which deal with siphoning of public funds and it was further held that the 2010 OM following the 2017 amendment included within its scope cases of such persons whose departure would be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n was also found. 5. Further, investigation from the search and seizure of Sudhir Gulati revealed that he owns and operates a group of companies involved in the export of readymade garments. The search and seizure carried out on the business and residential premises of Sudhir Gulati, Avtar Singh Kochhar and others on 6th February, 2019, also revealed over invoiced exports, trade-based money laundering, fictitious purchases, fraudulently availing of export incentives, etc. 6. Learned counsel appearing on behalf of the Income Tax Departments states that assessment proceedings are going on against Vikas Chaudhary and other co-accused and any further action will be taken pursuant to the outcome of the assessment proceedings. *** 8. An affidavit has been filed even on behalf of the respondent no.4, ORI, according to which it initiated its investigation on 11th September, 2019 into a case of 'undue availment of duty drawback and other export incentives by resorting to over valuation by the following export companies owned and controlled by Mr Vikas Chaudhary and his relatives, and his associates, namely, M/s Nautilus Metal Craft Pvt. Ltd., M/s Aash....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... mentioned therein would clearly convey the opposite. The petitioner has also placed reliance on the observations of the Hon'ble Division Bench of this Court in LPA No.78/2022 in "Income Tax Department v. Vikas Choudhary", an order dated 03.02.2022, wherein, it has been observed to the effect:- "Ongoing investigation has revealed that there are proposed additions upwards of Rs.14,83,93,68,372/- and penalties upwards of Rs.2,66,13,000/-. It is also submitted that the Appellant is investigating into the offences under the Black Money {Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and has submitted FT& TR references to the authorities in Dubai and under special enactments such as this Act, an FIR is not a pre-requisite for commencement of the investigation and on a complaint being filed, it is treated as a complaint case. It is thus urged by the learned counsel for the Appellant that if the impugned judgment quashing the LOC is not stayed, grave prejudice shall be caused to the investigation and if Respondent No.1 is permitted to travel abroad, it shall be detrimental to the core economic interests of the country and will be a contravention of the ver....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted that the investigation is ongoing with respect to a nonbailable offence under Section 276C of the Income Tax Act, 1961, which relates to wilful attempt to evade taxes and is punishable with a maximum sentence of 7 years of imprisonment and fine, which is evident from the letter issued by the Income Tax Department to the Bureau of Immigration on 19.02.2022, requesting issuance of Look out Circular. 31. Inter alia the petitioner reiterates that even at the stage of the investigation, a Look-out Circular can be issued to secure the presence of an accused during investigation. The petitioner further submits that the learned Trial Court has committed an error in ignoring the 2017 amendment to the O.M. of 2010 and has failed to construe the expression "Economic Interest of India" in a correct manner. The petitioner submits that where more than Rs. 600 Crores of tax dues on a potential income tax addition of Rs. 2200 Crore is likely to be made, based on incriminating seized materials, it cannot be said that the "Economic Interest of India" is not involved. The petitioner has reiterated the reliance on the verdict of the Division Bench of this Court, in LPA 78/2022, and order dated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t whilst opposing the prayer made by the petitioner it was vehemently urged as also submitted through the written submissions submitted on behalf of the respondent dated 13.9.2022 that in terms of the verdict of this Court in Sumer Singh Salkan Vs. Assistant Director & Ors. [2010 (4) JCC 2401] an LOC could not have been issued at all, and that the petitioner herein has concealed the bail order in the instant case and thus this Court ought to consider whether any relief at all ought to be granted to the petitioner who had indulged in concealment of facts. 35. The respondent further submits that a heavy amount of a personal bond and two Indian citizens as sureties has been imposed by the learned Trial Court as a condition of bail and the respondent has placed reliance on the order dated 17.8.2022 of the learned Trial Court granting bail to the applicant. 36. Vide order dated 17.8.2022 the learned Trial Court of the ACMM (Special Act) Central District, Tis Hazari Courts, had observed as under: "The application seeking bail u/s 436 Cr.PC is pending disposal. Reply filed by the complainant opposing the said application has been perused. Submissions made by counse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2022 has already been submitted. 38. The respondent further submits that he has given intimation of his proposed travel from 13.09.2022 and the next date of hearing in the criminal complaint before the learned Trial Court is 25.11.2022 and that the petitioner has not challenged the bail order. 39. The respondent further places reliance on the verdict of this Court in Nimmagadda Upendranath vs. Union of India & Anr [W.P. (CRL.) 2609/2021] submitting to the effect that in that case this Court had suspended the LOC and allowed the petitioner therein to travel abroad and that there was no coercive order passed in that case by the High Court of Andhra Pradesh also and that in the instant case also the Trial Court had grant bail to the respondent. 40. The respondent has further submitted that it was the petitioner who had himself submitted before the Division Bench that the respondent can approach the Trial Court with regard to bail and travel conditions and placed reliance on the order dated 26.7.2022 of the Division Bench of this Court in W.P.(C) No. 8048/2022 wherein it has been observed as under: "The respondent No.1 in its counter affidavit has averred as under: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re, the prosecution complaint has already been filed and Ld. ACMM, Tis Hazari Court, Delhi has already summoned the petitioner to appear before the Hon'ble Court. Considering the same, the Petitioner may now approach the Ld. Trial Court with regards to* bail and travel conditions of the Petitioner. Xxx xxx xxx xxx 41. That, in response to the Ground B4, it is submitted that, the Petitioner has been summoned by the Ld. ACMM and he can very well approach the Ld. Trial Court and explain the circumstances requiring him to travel abroad. That the Petitioner is not anunencumbered individual and has been summoned by the Ld. Trial Court for offence committed as per Section 275B of IT Act. Xxx xxx xxx xxx 43. That, the contents of Ground B6 are denied. It is again reiterated that, the prosecution has filed a complaint before Ld. ACMM and on the said complaint Ld. ACMM has taken the cognizance. Therefore, the Petitioner can approach the Ld. Trial Court and the Ld. Court can decide on the aspect of foreign travel of the Petitioner." 42. Inter alia, it has been submitted by the respondent that in the first round of litigation it was the petitioner who....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Mr.Long Cheng as CFO of the company but this fact was also concealed from this Court and it had been wrongly stated in the appeal that presently there is no CFO. 45. The respondent further submits that fresh or additional grounds cannot be permitted for the first time in an appeal as held by the Hon'ble Supreme Court in M/s Jindal Industries Vs State of Haryana 1991 Supp (2) SCC 587, with reliance placed on observations in paragraph 7 to the effect: "7. Although in the special leave petition, a specific allegation is made that the withdrawal of the exemption by the notification of August 23, 1977 was a mala fide act on the part of the new government. there is no such averment made admittedly in the writ petition which was filed before the High Court. Except a bare statement of the event in paragraph 15 which we have reproduced verbatim above, we do not find any averment with regard to the mala fides or any contention on that behalf in the petition. The mala fides are essentially question of fact and they have not only to be alleged but have also to be supported by the relevant material Since not even an averment was made in that behalf in the writ petition, the point ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... page 128 of the appeal which reads to the effect: "o) In view of the above mentioned factors a Look Out Circular was issued against the Petitioner because of his conduct during the course of the Search Action demonstrated that he was flight risk and that he did not wish to cooperate with the investigation proceedings at hand." 50. Likewise, the respondent places reliance on paragraph 38 on page 138 of the appeal which reads to the effect : "for initiation of proceedings against an individual. The LOC has been issued as the actions of the Petitioner clearly demonstrate that the petitioner intended to not comply with the proceedings at hand and the investigation into the finances of HTICPL." as well as on paragraph 44 at page No. 139 of the appeal which reads to the effect: "That, the content of Ground B7 are denied. It is submitted that, it is submitted that, Look-Out Circulars are issued only in the case of exceptional circumstances and in the current case, issuance of LOCs was resorted to considering the actions of the Petitioner and the company of which he is the Chief Executive Officer. The Petitioner has consistently denied and delayed the proc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce, that the respondents' stand, that the, power to issue an LOC can be traced to the 2010 O.M., or, those which precede the said O.M., is unsustainable, as it cannot be described as "law", within the meaning of Article 13(3)(a) of the Constitution. This submission, I must confess, has much merit in view of the decisions of the Supreme Court both in Maneka Gandhi case as well as in the case of A.K. Gopalan. Both judgements take the view that "law" referred to in Article 21, would mean "enacted law". 12.2 ..... in the petition, there is no relief sought to strike down the 2010 O.M. One of the reasons, perhaps for this would be that Ms Pillai was never furnished a copy of the LOC. ... .... 13.9 The actions of the respondents do not fall within the ambit of reasonable restriction, as articulated in Clause (2) of Article 19. Clause (2) of Article 19 protects a "law" which imposes reasonable restrictions on the exercise of rights conferred upon a citizen under Article 19(1)(a), in the interest of: sovereignty and integrity of India, the security of State, friendly relations with foreign States, public order, decency, morality or in relation to contempt of court, defama....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e amount will be dealt in accordance with law. The Bankers will issue a letter to the AO acknowledging the lien in favour of the Department" 54. The respondent thus reiterates that "the Company" has already given an FDR of Rs.200 Crores and Rs.30 Crores of refund is withheld and that thus revenue is secured by Rs.230 crores against the probable demand of Rs.600 crores and in terms of the Office Memorandum of the Ministry of Finance issued vide F.No. 404/72/93-ITCC, the demand would stand stayed till the pendency of the appeal by paying 20% of the demand and thus, against Rs.120 crores 'the Company' has already given 230 crores to the Revenue. 55. The respondent has further submitted that there can be no discrimination between a foreign National and an Indian National with it having been submitted by the respondent that the right to protection of life and personal liberty (right guaranteed against State Action) is available even to a foreign citizen in terms of Article 21 of the Constitution of India. Reliance in relation thereto has been placed on behalf of the respondent on the verdict of this Court in Anil Mahajan vs. Commissioner of Customs & Anr., 2000 Crl.L.J. 2094 with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....antime in terms of the order of the Division Bench of this Court in W.P.(C) 6352/2022 the Company had already agreed to secure the interest of the Petitioner and had deposited a sum of Rs.230 crores and thus the respondent submits that even if it is presumed that there is any concern of "Economic Interest", the Company of the respondent had already secured the interest of the revenue and that has already been decided by this Court. 60. The respondent submits that he has already informed his family and his family is also joining him in Thailand; that the respondent has wife, a 13 year old son and a 3 year old daughter. Inter alia, the respondent submits that the Trial Court had passed the impugned order on 29.8.2022 whereby the Trial Court had been pleased to recall the LOC issued against the respondent but that the petitioner filed the appeal only on 9.9.2022 and got it listed for 12.9.2022 and came to the Court at the last moment. The respondent submits that he has already filed his intimation for going abroad in terms of the bail order dated 17.8.2022 and as per the intimation the respondent had to travel to Thailand on 13.9.2022 and it was to show and create an urgency, the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot also disclose the fact in the criminal revision filed before the High Court that he has also been convicted in another Criminal Case No. 202 of 1997 by the Court of Metropolitan Magistrate, Patiala House, New Delhi. Thus, the contesting respondent has come to the High Court with unclean hands and withholds a vital document in order to gain advantage on the other side. In our opinion, he would be guilty of playing fraud on the Court as well as on the opposite party. A person whose case is based on falsehood can be summarily thrown out at any stage of the litigation. We have no hesitation to say that a person whose case is based on falsehood has no right to approach the court and he can be summarily thrown out at any stage of the litigation. In the instant case, non-production of the order and even non-mentioning of the conviction and sentence in Criminal Case No. 202 of 1997 tantamounts to playing fraud on the Court. A litigant who approaches the court is bound to produce all documents which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Ministry of Home Affairs which has issued the Office Memorandum is not even a party to the present proceedings and that a challenge to these OMs is pending before a Coordinate Bench of this Court in W.P. (C) No. 10482/2022 and other batch of cases. 67. The petitioner further denies that the Income Tax Department's entire likely demand of Rs. 600 crores stands secured and rather submits that the Division Bench of this Court vide order dated 30.8.2022. in W.P.(C) 6352/2022 was only to balance the equities and thus the Division Bench had passed an order securing the revenue with only Rs. 230 crores and not the entire likely demand of Rs. 600 crores and that there is still a deficit of Rs. 370 crores. 68. The petitioner has further submitted that the Courts have consistently taken a stricter view insofar as suspending an LoC in the case of a foreign national for the reason that a foreign national has no roots in India and is presumed to be a flight risk and the petitioner has further submitted that the reliance placed by the respondent in the case of Karti P. Chidambaram (supra) is inapplicable in the present case as he is an Indian national and travel to him was allowed by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er be set aside. 73. In terms of the directions dated 12.9.2022 during the course of the hearing of the present petition it was directed as under: " ...... On a perusal of the impugned order, it is indicated that the petitioner has placed before the learned Trial Court, in a closed envelope, a copy of the letter written to the authority concerned for issuance of the look out circular and the proforma for issuance of the LOC and the proposal for issuance of the LOC. It is essential that that this Court peruses the said document which, it is submitted on behalf of the petitioner, would be submitted during the course of the day. The same be submitted accordingly." Pursuant to the said directions the petitioner has placed on record the copy of the letter written to the authority concerned for issuance of the Look out circular and the proforma for issuance of the LOC and the proposal for issuance of the LOC in a sealed cover. ANALYSIS 74. On a consideration of the submissions made on behalf of either side, it is considered essential to advert to the observations in the impugned order dated 29.8.2022 of the Court of the learned Additional Chief Metr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gkok, he was not allowed to board the flight and was later informed that a look out circular was issued against him. By moving the present application, the applicant seeks quashing of that look out circular. It is submitted by the ld. counsel for the applicant that applicant was traveling to Bangkok to attend an internal meeting of the company but he was not able to reach Bangkok thereby dealing a huge blow to the reputation of the applicant as well as of the company. He contended the offence alleged to have been committed by the applicant is punishable with maximum imprisonment for a period of two years, so the same is non-cognizable and bailable, therefore an LOC could not have been opened with regard to this offence. He claimed that the LOC issued against the applicant is bad in law and the same is in violation of article 14 & 21 of The Constitution of India. He submitted that the LOC shall be quashed as the same is not issued as per the extant judicial pronouncements and circulars issued by the Union Government. Written submissions were placed on record by the applicant. Reply to this application was filed by ITO wherein it informed that the investigation qua ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcumstances? b) What procedure is required to be followed by the investigating agency before opening a Look-out-Circular? c) What is the remedy available to the person against whom such Look-out-Circular has been opened? d) What is the role of the concerned Court when such a case is brought before it and under what circumstances the subordinate Courts can intervene? The answers to these questions were provided by the High Court, which are reproduced in verbatim:- a) Recourse to LOC can be taken by investigating agency in cognizable offences under IPC or other penal laws, where the accused was deliberately evading arrest or not appearing in the trial court despite NBWs and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest. b) The Investigating Officer shall make a written request for LOC to the officer as notified by the circular of Ministry of Home Affairs, giving details & reasons for seeking LOC. The competent officer alone shall give directions for opening LOC by passing an order in this respect. c) The person against whom LOC is issued must join investigation b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o. Tt is also not the case that the applicant was trying to evade the arrest. In fact, in the complaint case the applicant appeared and was admitted to bail. He made a statement before the court that he shall inform the concerned officer of ITO at least seven days prior to leaving India in the event of quashing of LOC by the court. The view expressed in the case of Sumer Singh Salkan (supra), was incorporated by FRRO in Office Memorandum dated 27.10.2010. This office memorandum has been amended by Office Memorandum No. 25016/10/2017 -IMM dated. 05.12.2017 which made the following additional to the extant guidelines: In exceptional cases, LOCs can be issued even in such cases, as would not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in Clause (b) of the above-referred OM, if it appears to such authority based on inputs received that tile departure of such person is detrimental to the sovereignty or security or integrity of India or that the same is detrimental to tile bilateral relations witl1 any country or to the strategic and/or economic interest of India or if su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....servation made by High Court of Delhi in Shri Sathish Babu Sana v. Central Bureau Of Investigation W.P.(CRL) 249/2019 decided on 28.01.2022:- 10. The petitioner thus satisfies the test laid down by this Court in Sumer Singh Salkan (supra) as he has neither deliberately evaded arrest nor failed to appear before the Trial Court despite the non-bailable warrants nor has any coercive action been taken against him and he has travelled abroad number of times with the permission of the Court, which concession he did not misuse and therefore there is no justification in continuing with the LOC opened against the petitioner. Hence the respondent is directed to recall its request for opening the LOC against the petitioner. It is further directed that that the petitioner will continue to join the investigation as and when directed by the Investigating Officer and any condition that is imposed by the learned Special Judge in the complaint lodged pursuant to the ECIR, when the petitioner seeks permission to travel abroad will also be applicable in the abovenoted RC No.224/2017/A-001, till the charge-sheet is filed and thereafter, if the petitioner is charge-sheeted and summoned as an a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tia, Deputy CFO; and Mr. Amit Duggal, Head of Taxation" on account of denial of the adequate facility to the Authorized officers empowered u/s 132 of the Income Tax Act. The said accused no.1/company is assessed for A.Y 202021 with office of Circle 1(1), Gurgaon. Subsequently the case has been centralized with Central Circle 02 under the jurisdiction of CCIT (Central) Delhi. 76. It is further stated through the said complaint that (para 2 of the complaint) " That a search u/s 132 of Income Tax Act, 1961 dated 15.02.2022 was carried out upon M/s Huawei Telecommunication (India) Company Pvt. Ltd. (hereinafter referred to as HTICPL) during the course of which warrants of authorization were issued in favour of officers/team empowering them to carry out the actions as envisaged in sub-clauses (i) to (v) of clause (1) of section 132 of Income Tax Act covering the premises of the accused company; along with two of such warrants issued for the corporate offices of HTICPL located at 9th, 10th and 11th Floor, Capital Cyberscape, Gurugram Manesar, Urban Complex, Sector-59, Ullahwas, Gurugram, Haryana- 122011; wherein the books of accounts as per Form 3CD of the company as per latest audite....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... accounts besides access to underlying relevant documents of the accused company. The said factual matrix is duly corroborated by statements of said officials of the company holding imminent positions with ample power, control, dominion and authority to assist the officers. 5*. That as per section 275-B of the Income Tax Act, 1961, any person who is required to afford the facility to the Authorized Officers to inspect the books of accounts and other documents required during the search under clause (iib) of sub-section (1) of section 132 of the Income Tax Act, 1961 fails to afford such facility to the authorized officers as empowered; then such persons are said to be liable to be prosecuted for the commission of offence u/s 275-B of the Income Tax Act, 1961. 6. That the accused No. 1 is the accused company; the accused No. 2 Mr. Li Xiongwei is the Chief Executive Officer of the accused company; accused No. 3 Mr. Sandeep Bhatia is the Deputy Chief Financial Officer of the accused company; accused No. 4 Amit Duggal is the Head of Tax; and accused No. 5 Mr. Long Cheng is the in-charge of transfer pricing issue under the tax team of the accused company. Each of the ab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccused company to the Authorized Officers. Mr. Amit Duggal during the course of the investigation further stated that he cannot provide the access to t he email(s) *of the CFO of the company as the same was beyond his power. He further stated that he was not aware of the person(s) who are responsible for the preparation of Profit and Loss A/c and Balance Sheet from ERP data. It is interesting to note that Mr. Amit Duggal while being the "Head of Tax" is not aware of the person responsible for preparation of the books of accounts of the company; on the basis of which the tax liability of the company is calculated. Thereby establishing the deliberate withholding of material information on part of Mr. Amit Duggal to not provide the Authorized Officers to conduct the search and verify the financials of the company and its compliance to, in consonance with various statutory provisions. The certified copy of statement of Mr. Amit Duggal (Head of Tax of the accused company) recorded u/s 132(4) of the Income Tax Act dated 15.02.2022 is annexed herewith as Annexure G. 10. That both the Deputy CFO/accused no. 3 and the Head of Tax/ accused no.4 of the accused company have simply shi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cial data of the accused company to the Authorized Officers .However, he sought adjournment of 3 days to provide the dump data for F.Y. 2020-21 in 3CD format ; and another 6 weeks to provide the financial data of the company from for FY 2014-15 to FY 2019-20 from the Finance Team. The said exercise was /is in the direction of not affording facility to the Authorized Officers as mandated. The certified copy of statement of Mr. Li Xiongwei (CEO of the accused company) recorded u/s 132( 4) of the Income Tax Act recorded w .e.f 17.02.2022 is annexed herewith as Annexure -I. 13. That on the basis of the above facts, and the continuing failure of the accused company to provide even basic digitally maintained data w.r.t their financial books /data during the search operation. The accused seeking extensive time in furnishing the same a Show Cause Notice u/s 279 of the Income Tax Act, 1961 for initiation of prosecution u/s 275-B of the Income Tax Act, 1961 against the accused company was issued on 18.02.2022 by the Principal Director of Income Tax (Inv.)-2, Delhi. 14. That a reply dated 21.02.2022 was filed on behalf of the accused company wherein the accused company took ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Cyberscape, Gurugram Manesar Road. That upon being asked to provide the details of the provisions created in the company's balance sheet and Profit and Loss A/c he stated that the same would also require more than 10 days to be furnished before the Authorized Officers; while Mr. Li Xiongwei upon being confronted with this statement of Mr. Amit Duggal feigned further ignorance and stated that only Mr. Amit Duggal would be better aware of these matters. The certified copy of statement of Mr. Amit Duggal (Head of Tax*of the accused company) dated 22.02.2022 u/s 132( 4) of lncome Tax Act, 1961 is annexed herewith us Annexure- K. The report of the authorized officer is placed as Annexure L. 17. That a subsequent reply to t he SCN u/s 279 of the Income Tax Act, 1961 was filed by the accused company on 08.03.2022 wherein they sought the reports of the Authorized Officers of the Department that have attracted t he charges u/s 275B of the Income Tax Act, 1961. The company further stated that all the compliances were adhered to and followed by the accused company as well as its employees in providing and complying with the furnishing of the relevant information. It is reiterat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... informed about the arrival/departure of the subject in such cases.", this Office Memorandum takes into account the verdict of this Court in Sumer Singh Salkan v. Assistant Commissioners & Ors. W.P.(Crl.) No. 1315/2008 and in Crl. Reference 1/2006-The Court on its own Motion Re: V . State Vs. Gurnek Singh Etc. wherein the questions in para 6 of the Office Memorandum to the effect: "a) What are the categories of cases in which the investigation agency can seek recourse of Look-out-Circular and under what circumstances? b) What procedure is required to be followed by the investigating agency before opening a Look-out-Circular? c) What is the remedy available to the person against whom such Look-out-Circular has been opened? d) What is the role of the concerned Court when such a case is brought before it and under what circumstances the subordinate courts can interevene?" were answered in Sumer Singh Salkan(Supra) vide judgment dated 11.08.2010 to the effect: "A. Recourse to LOC can be taken by investigating agency in cognizable offences under IPC or other penal laws, where the accused was deliberately evading arrest or not appearing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s as mentioned in Clause 8(b) of the above referred OM i.e., the OM No. 25016/31/2010-IMM dated 27.10.2010, if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty, security or integrity of India or that the same is detrimental to the bilateral relations with any country or to the strategic and/or economic interest of India or if such person is allowed to leave or he may potentially indulge in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger interest at any given point in time. Apparently as rightly observed by the learned Trial Court the allegations against the petitioner do not relate to any aspect of the departure of the respondent being detrimental to the sovereignty or security or integrity of India nor to the bilateral relations with any country nor to the strategic interest of the country nor is it brought forth in any manner by the petitioner that the respondent was potentially likely to indulge in any act of terrorism or offences against the State or that his departure ought not be permitted in the larger interest at any given point in time.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m discharging their duties and that thus the presence of the Chief Executive Officer (the respondent herein) of M/s Huawei Telecommunications (India) Company Private Limited (HTICPL) inter alia was necessary during the course of further investigation which would be carried out and that the on going investigation into various violations submitted by the companies would take ample time due to the examination of extensive evidences that had been seized and due to offences committed by the companies and their employees thus necessitating the issuance of the LOC inter alia against the respondent. The approval accorded on 19.2.2022 to the issuance of the LOC takes into account the aspect of the respondent being a flight risk from whom a number of details are stated to be required. 85. Taking into account the factum that the investigation into the alleged commission of the offence punishable under Section 276C(1)(i) of the Income Tax Act, 1961, by the Companies involved allegedly including M/s Huawei Telecommunications (India) Company Private Limited (HTICPL) of which the respondent at the relevant time is stated to have been the CEO, would apparently take considerable time, the respon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er has relied upon all relate to alleged commission of non-bailable offences in which the issuance of the LOCs have been upheld in as much as they relate to offences inter alia punishable under the Prevention of Money Laundering Act, 2002, Prevention of Corruption Act, 1988, the Central Goods and Services Tax Act, 2017 and the non bailable offences under the Indian Penal Code, 1860. CONCLUSION 88. In the circumstances, though it is not considered appropriate by the Court to set aside the impugned order dated 29.8.2022 of the learned Trial Court which has set aside the LOC against the respondent in addition to the conditions imposed by the learned Trial Court to the effect that in case of resignation, retirement or cessations of employment etc. of the respondent company, M/s Huawei Telecommunications (India) Company Private Limited (HTICPL) shall withhold the severance pay/severance package and other incentives/emoluments payable to the respondent and the same shall not be released without permission of this Court to which effect an undertaking has been directed to be submitted of the company to be filed before the Trial Court under intimation to the petitioner which the respo....