TaxTMI 
TaxTMI 
2022 (9) TMI 1101
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....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to take appropriate steps for withdrawing the lookout circular against the applicant and the same was directed to be withdrawn/recalled within 7 days of filing of the undertaking by the applicant.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 District, Tis Hazari, is stated to have ....
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.... 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 statutory warrants of authorization were issued by the Competent Authority authorizing the officers to carry out any or all of the actions mentioned in sub-clauses (i) to (v) of clause (1) of section 132 of the IT Act, 1961 for variou....
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....pany 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 Tax Act was filed before the Court of competent jurisdiction on 18.05.2022 after completing of the procedural formalities, and the learned Trial Court took cognizance of the complaint on 26.05.2022. 12. The petitioner has submitted further that....
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..... 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 Petitioner shall not repatriate any royalty or dividend abroad. The Petitioner will be at liberty to approach this Court, in case the need so arises. (v) The Petitioner shall continue to file its monthly statement with the assessing officer of 'Payments Received as well as Made'. 8. Though a s....
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....troversy 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 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." Keeping in view the aforesaid averments as well as the law laid down by this Court in Sumer Singh Salkan vs. Assistant Director & Ors. reported in ILR (2010) VI Delhi 706, lea....
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....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 the Act. It appears that pursuant to search conducted by ITO on 15.02.2022, a request for issuance of look out circular was made to the authority concerned by the Deputy Director of Income Tax (Inv) Unit 4(3), Delhi for issuance of lookout circular against the applicant. On 01.05.2022 when applicant went to Delhi airport to board a Thai Airways International Flight for traveling to Bangkok, he was not allowed to boar....
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.... 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 wherein the presence of applicant is required. ln Sumer Singh Salkan v. Asst. Director & Ors. 2010 (4) JCC 2401 while dealing with a reference sent by court of Ld. ACMM, Delhi, regarding LOC, the High Court of Delhi formulated the following questions:- a) What are the categories of cases in which the investigating agency can seek recourse of Look-out-Circular and under what circumstances? b) What procedure is required to be followed by the investig....
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...., 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 be to ensure that the applicant does not escape from India. Hence, it appears from the documents produced in closed envelope that LOC was issued not due to the pendency of the complaint case but for reason of ongoing investigation against the company. It is not the case of the ITO that the applicant did not appear before the investigating officer as and when directed to do so. It 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 mad....
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....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 revenue from India, it is prudent that a condition be imposed upon payment of salary, bonus, ESOPs and other benefits to the applicant by the accused company, so as to exercise some degree of control over him. There is no ground to keep the LOC open against the applicant and the LOC against the applicant is liable to be set aside. At this juncture, it is apposite to advert to the observation 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....
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....ar 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 evading arrest or failing to appear before the Trial Court, and where there is a likelihood of the accused leaving the Country to evade trial/arrest. Inter alia, the petitioner has submitted that the 2010 OM was amended in 2017 vide OM dated 05.12.2017 permitting an LOC to be issued without complying with all earlier requirements, in exceptional circumstances, if it appears to the issuing authority based that, inter alia, the departure of such a person is detrimental to the economic interests of India and that several Courts have invoked the amended OM of 2017 while upholding the power of issuance of LOC wh....
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....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, anti-national elements, etc. in larger national interest and in view of the fact that the Petitioner was arrayed as A2 in Crime No. 304 of 2012 based on the confession of A1 to the effect that 'the Petitioner/A2 was dealing with lottery tickets of Sikkim and Nagaland which were banned in Tamil Nadu and they were printing and selling such lottery tickets to innocent purchasers and thereby cheating the public and keeping the above said amount as unaccounted one and obtained as unlawful gain' etc., the said act of the Petitioner/A2 along with other two accused (Nagarajan-A1 and Moorthy-A3) comes within the ambit of an exceptional case ....
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....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 437 with specific observations in paragraph 11 thereof, which reads to the effect:- "11. We are not inclined to extend the benefit to the revisionist-accused of the law laid down in the judgment of Karti P. Chidambaram (Supra) because in the present case, the LOC has been issued with a view to interrogating the revisionist in the matter at hand wherein the FIR has already been lodged and the investigation is going on. Merely because the revisionist so far had been cooperating with the investigation, may not lead us to believe that he would not evade his arrest in future. If some incriminating evidence comes on record against him, the possibility cannot be ruled out in....
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....mbay 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 detrimental to the "economic interest of India." 27. The petitioner has further placed reliance on the Co-ordinate Bench of this Court in "Rajesh Dhanda v. Union of India" in Writ Petition (Crl.) No. 1588/2021, a verdict dated 24.01.2022, wherein, it was observed to the effect:- "3. By this petition, the petitioner has sought various directions to the respondents including proper investigation under Section 5 read with Section 3 of the PMLA and Section 83 of the CGST Act by a Special Investigating Team (SIT) etc. on the complaint filed by the petitioner dated 29th July, 2021. 4. Learned counsel for the petitioner refers to the counter affidavit filed by the respondent no. 7, the Income T....
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....ment 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 Aashtha Apparels Pvt. Ltd., M/s JBB Apparels Pvt. Ltd. and M/s JBN Apparels Pvt. Ltd. 9. It is thus evident that in the complaints referred in the present petition, investigations by the Income Tax Department, DDGI and ORI have been conducted, however, as regards SFIO there is no investigation carried out. As per the affidavit filed on behalf of the SFIO since under Sections 210, 212 and 213 of the Companies Act, the Central Government has to direct investigation into the affairs of the company and since no such direction has been received, the SFIO cannot investigate the affairs of the company. The Central Government, which has been impleaded as respondent no.1, Ministry of Corporate Affairs will treat the present petition as a represen....
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....cement 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 very object for which OMs dated 05.12.2017 and 22.02.2021 have been issued. It is emphasised that the OM dated 05.12.2017 was issued by the Government of India, Ministry of Home A/fairs Foreigners Division {Immigration Section), amending the OM dated 27.10.2010 and expanding its scope to issue LOCs against persons impacting the economic interests of India and the OM dated 22.02.2021 was issued laying down fresh Guidelines for issuance of LOCs and it is clearly stipulated therein that no LOC shall be deleted automatically and shall remain in force till a deletion request is received from the Originator. Learned Senior Counsels appearing for Respondent No.1, on the other hand, refute the contentions of the Appellant and submit that the Learned Single Judge has righ....
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....nterest 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 3.2.2022 therein already referred to herein above. The petitioner submitted that the findings of the Trial Court are thus not in consonance with the prima facie view of the Division Bench of this Court in LPA 78/2022. The petitioner reiterates that economic offences involving huge public funds need to be viewed seriously as they affect the economy of the country as a whole and pose a serious threat to the financial health of the country as a whole. The petitioner further submits that in view of the glaring facts of this case and the huge economic fraud coupled with the factum that the respondent is on bail in connected cases, the present LOC deserves to be continued. 32. Inter alia, the petitioner has submitted that the contention of the respondent that the prose....
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....r 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 counsels for the respective parties have been considered. The offience being bailable in nature, the accused Xiongwei Li is admitted to bail on his furnishing personal bond in the sum of Rs.5,00,000/- with two sureties in like amount, to the satisfaction of this court/ Link MM/Duty MM as the case may be. Both sureties shall be Indian citizen. The applicant is a foreign national and in case he leaves India and decides not to return, then his personal bond may practically become worthless, hence, to guard against such a scenario. the applicant shall place on record an interest bearing FDR of Rs.5,00,000/- in the name of Learned Principal District and Sessions Judge, HQ, Tis Hazari. Delhi which may be appropriated in case the personal bond is forfeited. Personal bond furnished by the accused is accepted t....
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....itioner 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: 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 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." Keeping in view the aforesaid averments as well as the law laid down by this Court in Sumer Singh Salkan vs. Assistant Director & Ors. Reported in ILR (201....
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....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 had submitted that the Trial Court may decide on the issue of travel. The respondent further submits that the reasons now sought to be argued before this Court were not argued on behalf of the petitioner on previous three occasions before the Division Bench; in the reply to the Trial Court nor whilst making the request for the LOC and that the most important documents were ordered by the learned Trial Court to be submitted in a sealed cover. The respondent thus submits that there can be no relief granted for a new reason sought to be put forth by the petitioner when the said reason was not put forth in the request sent for opening of the LOC and reliance in relation thereto is placed on behalf of the petitioner in Opto Circuit India Ltd Vs. Axis Bank and Ors; a verdict of the Hon'ble Supreme Court in Crl.Appeal 102/2021 decided on 3.2.2021. The respondent places reliance on observations in para ....
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....ontention 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 cannot be permitted to be taken up for the first time in this appeal." 46. The respondent further submits that reasons for opening LOC was not "Economic Interest of India" and additional pleadings cannot be brought forth for the first time before the Court. The respondent places reliance on observations in the impugned order of the learned Trial Court dated 29.8.2022 wherein it had been observed vide paragraph 5 of the said order to the effect: "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 or the company would be required to appear before the investigating officer for purpose of investigation. The reason for issuance of LOC seems to be to ensure that the applicant d....
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....ances 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 proceedings at hand even to the point of not providing access to the emails of the CFO of the company who remains outside of India. It further submitted that rights of an individual needs to be balanced with safeguarding the interest of the Prosecuting and investigating agencies." as well as on paragraph 45 at page No. 140 of the appeal which reads to the effect: "45. That the contents of Ground B8 are denied. It is submitted that, the impugned LOC has been issued after considering the actions of the Petitioner which leads to a substantial belief that the Petitioner wishes to evade the investigation being carried out against HTICPL." 51. The respondent further submits that a circular cannot override the ratio of the judgment of the High Court/Supreme Court as held in Commissioner of Central Excise, Bolpur V. Ratan Melting & Wire Industries; (2008) 13 SCC 1 wherein it has been categorically observed vide paragraph 7 thereof to the effect: "7. Circulars and ins....
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.... and integrity of India, the security of State, friendly relations with foreign States, public order, decency, morality or in relation to contempt of court, defamation or incitement to an offence. As indicated above, even if I were to assume that 2010 O.M. has the status of law, qua which I have a serious doubt, the action of the respondents in issuing an LOC vis-a-vis Ms Pillai cannot be categorized as a reasonable restriction, as it is not a restriction which falls in any of the limitations articulated in clause (2) of Article 19." 53. The respondent further submits that the petitioner's concern of a probable demand of Rs.600 crores is already secured by the Company vide a judgment of the Division Bench of this Court and that further the CEO is only an employee of the company and the demand is not payable by the CEO. Inter alia, the respondent submits that the impugned order relates to an application of the CEO of the company, i.e., the respondent and now there is a CFO in the company and the claim will be against the company and not against the CEO and that the company has already given Rs.230 crores as deposit in terms of the order of the Division Bench of this Court dated 30.....
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....en 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 specific reliance on observations in paragraph 14 (o) thereof which is to the effect: "(o) Law does not authorize or permit any discrimination between a foreign National and an Indian national in the matter of granting bail. What is permissible is that considering the facts and circumstances of each case, the Court can impose different conditions which are necessary to ensure that the accused will be available for facing trial. It cannot be said that an accused will not be granted bail because he is a foreign national." 56. Inter alia, the respondent submits that the judgments relied upon by the petitioner relate to non-bailable offences inclusive of the verdict in Income Tax Department V. Vikas Chaudhary and Ors. (LPA 78/2022) which related to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 qua which the offence is punishable upto 10 years of imprisonment and that the offence is a non-bailable offence. The respondent further submits that the other judgments relied upon by the petitioner in C. Sivas....
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.... respondent had to travel to Thailand on 13.9.2022 and it was to show and create an urgency, the petitioner filed the appeal at the last moment for which if there had been an urgency the petitioner ought to have filed it earlier. 61. The respondent has submitted that this Court ought not to tolerate an indolent litigant in as much as delay defeats equity and places reliance on paragraph 14 of the verdict of the Hon'ble Supreme Court in Hameed Joharan (D) and others vs. Abdul Salam: AIR 2001 SCC 3404 wherein it has been laid down as under: "14. Needless to record that engrossment of stamped paper would undoubtedly render the decree executable but that does not mean and imply however, that the enforceability of the decree would remain suspended until furnishing of the stamped paper - this is opposed to the fundamental principle of which the statutes of limitation are founded. It cannot, but be the general policy of our law to use the legal diligence and this has been the consistent legal theory from the ancient times. Even the doctrine of prescription in Roman Law prescribes such a concept of legal diligence and since its incorporation therein, the doctrine has always been favoure....
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....n he would be guilty of playing fraud on the court as well as on the opposite party. The second respondent, in our opinion, was not justified in suppressing the material fact that he was convicted by the Magistrate on an earlier occasion. Since the second respondent deliberately suppressed the crucial and important fact, we disapprove strongly and particularly, the conduct of the second respondent and by reason of such conduct, the second respondent disentitled himself from getting any relief or assistance from this Court. We, however, part with this case with a heavy heart expressing our strong disapproval of the conduct and behaviour but direct that the second respondent to pay a sum of Rs 10,000 by way of cost to the appellant herein." 64. The petitioner vide its written submissions dated 14.9.2022 filed after the written submissions filed by the respondent on 13.9.2022 inter alia whilst urging that the impugned order be set aside, whilst refuting the contentions of the respondent has submitted that the verdict relied upon on behalf of the respondent in Opto Circuit India Ltd. V. Axis Bank & Ors.; (supra) has no applicability to the facts of the instant case for the reason that....
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....nt case as he is an Indian national and travel to him was allowed by the Hon'ble Supreme Court only on deposit of Rs. 10 Crores and reliance has been placed by the petitioner on the order dated 7.5.2019 of the Hon'ble Supreme Court in I.A. No. 68510/2019 in T.C. (Crl.) No. 03/2018. 69. The petitioner has further submitted that the right to travel is not an absolute right and the need of the presence of an accused during investigation is a reasonable restriction and a valid reason for issuance of a Look-out Circular. 70. The petitioner has further submitted that the contention that the petitioner is just an employee of the company, fails to consider that he is liable to be proceeded against in terms of Section 278B of the Income Tax Act, 1961, which provides as under: "Offences by companies: 278B. (1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly" 71. The petitioner fu....
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....tional Chief Metropolitan Magistrate, (Special Acts), Central District, Tis Hazari Courts. Vide the said order it was observed as under:- ""By this order, I shall dispose of an application filed on behalf of applicant Xiongwei Li for quashing of look out circular (LOC) issued against him at the request of Income Tax Office (ITO). The events that necessitated the filing of this application are that on 15.02.2022 a search u/s 132 of The Income Tax Act, 1961 (hereinafter called 'The Act') was conducted by the officers of ITO at the Capital Cyberspace, Gurugran, Manesar, Urban Complex, Sector-59 office of M/s Huawei Telecommunications (India) Company Private Limited (in short 'the company'), wherein the books of accounts (as per the Form 3CD) were kept for the purpose of verification and determination of 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....
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....s officers including the applicant is going on. It alleged that till date, all data and books of accounts sought from the company, its personnel and representatives have not been provided. It is also averred that the issue of arm' length price of related party transactions during the course of Transfer Pricing proceedings is being investigated and if may require re-examination of the applicant by the officers conducting investigation and may also result in filing of subsequent prosecution against company and/or its officials. He relied upon the -statement of Lalit Kumar i.e. the Statutory Auditor of the company, to show that the data provided to the department is insufficient to reconcile the same with the financial statements of the company. He contended that in case the look out 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 ITO. 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 envelo....
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....urt that LOC was wrongly issued against him. He may also approach the officer who ordered issuance of LOC & explain that LOG was wrongly issued against him. LOC can be withdrawn by the authority that issued and can also be rescinded by the trial court where case is pending or having jurisdiction over concerned police station on an application by the person concerned. d) LOC is a coercive measure to make a person surrender to the investigating agency or Court of law. The subordinate courts jurisdiction in affirming or cancelling LOC is commensurate with the jurisdiction of cancellation of NBWs or affirming NBWs. It is evident from perusal of the answers in the aforementioned reference that LOC 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 commissi....
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.... permitted in the larger public interest at any given point of time. The applicant does not come within this additional criteria, as the departure of applicant cannot be stated to be detrimental to sovereignty, security and integrity of India, it is also not detrimental to bilateral relations with any other country or to strategic and/or economic interest of India. It is highly unlikely that the applicant will indulge in act of terrorism or offence against Indian state. Thus, an apprehension that the applicant may leave India and may never come back cannot be ground to keep him in India till the culmination of all legal proceedings, which may emanate 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 ....
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.... is cognizant of the fact that the applicant does not have any movable or immovable assets in India except his bank account. Moreover, none of the family members and relatives of the applicant permanently reside in India, hence, there is little incentive for the applicant to come to India once he leaves the country with an intent to not return back. It is also doubtful 'whether the sureties would be in a position to compel the applicant to come to India should he decide against coming back for facing prosecution in complaint case or for appearing before the investigating officer. In these circumstances, it is ordered that in case 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....
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....13.11.2014 assigning jurisdiction to the Directors General of Income Tax/Principal Directors of Income Tax over the territorial areas of whole of India to conduct a Search Action u/s 132 of the Income Tax Act, (Part of Chapter -III) is attached as Annexure D. 3. That as per the provisions of section 44AB of the Income Tax Act, any entity with a turnover of over Rs. 1 crore is required to get the financials audited in the prescribed form as provided under sub-rule 1 of Rule 6G of Income Tax Rules, 1962. In furtherance to the same, the audited report is to be submitted in Form 3CA wherein the particulars as prescribed by Form 3CD are required to be furnished. That as per point no. 11(b) of Form 3CD the list w.r.t the availability of books of accounts of the entity at their respective addresses is required to be submitted. On perusal of the audit report dated 08.06.2020, the books of accounts as per prescribed Form 3CD of the accused company in the Profit and Loss Account for the period between 01.04.2019 to 31.03.2020 being General Ledger, Journal Book, Monthly payroll records, Inventory Ledger, Fixed assets register were all kept in computerized form along with various relevant do....
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....its financials and books of accounts. Their apparent non-compliance resulted in obstructing/stifling the search action by not affording the facility to the authorized officers. Therefore, they have rendered themselves liable for prosecution u/s 275-B r/w section 278-B of the Income Tax Act, 1961. 7. That during the course of the search the statement of accused nos.5 was recorded, which establish the deliberate effort on the part of these officials of the accused no.1 /company were in deep cahoots to frustrate the search proceedings and failure to present the books of accounts of the company along with the relevant documents i.e affording the facility required to carry out the search effectively to the Authorized Officers duly empowered and authorized u/s 132 of the Income Tax Act, 1961. 8. That as per the statement of Mr. Sandeep Bhatia (Deputy CFO of the accused company) recorded u/s 132(4) of the Income Tax Act dated 16.02.2022; he deposed that the financials of the company were recorded on ERP software wherein the financial data of books of accounts were maintained containing the Balance Sheet, Profit and Loss A/c, trial balance, schedules and backup of trial balance, with s....
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....t is further impossible for the company carrying out such quantum of business on a global scale to function without daily maintenance and updation of its books of accounts. That withholding the financials of the company on part of these officers concerned point to the fact that the delay w.r.t bringing forth the financial statements of the accused company is/was orchestrated for the only reason to present sanitized and amended version of books in order to project as if the compliance(s), accounts are /were being maintained strictly as mandated by the statute(s). 11. That statement of Mr. Long Cheng (incharge of transfer pricing issues of the accused company) was also recorded u/s 132(4) of the Income Tax Act recorded from 17.02.2022; and he stated that the books of accounts of the company are maintained by the "Finance Team". However, he could not provide the details of the same. He further stated that he was not even aware of where the books of accounts of the company are kept. Upon being asked to furnish the documents pertaining to transfer pricing issue, Mr. Long Cheng stated that the complete data would require several weeks to find and that he can only provide sample data wi....
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....e Tax Act. However, the same was found untenable and are contrary to the statements of the individuals holding key positions in the said company. The certified copy of the 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 issued on 18.02.2022 by the Principal Director of Income Tax (Inv .)-2, Delhi along with its reply dated 21 .02.2022 are collectively annexed herewith as Annexure -J (In Colly). 15. That even on the day of issuance of the Show Cause Notice for initiation of prosecution u/s 279 of the Income Tax Act, 1961 there was complete failure and non-compliance on t he part of the Mr. Li Xiongwei (CEO of the accused company) for providing the required data of the company as sought by the Authorized Officers. The same stands amplified by the statement of Mr. Li Xiongwei recorded u/s 132(4) of the Income Tax Act, 1961 (as amended up to date) which continued on 18.02.2022 wherein he stated that he requires 7 days to provide the forex earnings of the company. Regarding the treatment of various provisions and the underlying documentary evidence and notes thereto for the creation o....
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.... (1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to, be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence." 19. The guilt of the accused shall be proved both by oral and documentary evidence. PRAYER It is prayed that accused no. 1 to 5 be summoned to stand trial u/s 275-B r.w.s 278B of the Income Tax Act, 1961 and they be convicted and sentenced in accordance with the provisions of law." 77. Thus the complaint that the petitioner filed inter alia against the respondent herein arrayed as accused no.2 relates only to the commission of a non-cognizable and bailable offence for allegedly non-affording the authorized officers under the Income Tax Act, 1961, the necessary facility to inspect the books of accounts or other documents as required in terms of Section 132 (1)(iib) of the said ena....
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....OC by passing an order in this respect. C. The person against whom LOC is issued must join investigation by appearing before I.O. or should surrender before the court concerned or should satisfy the court that LOC was wrongly issued against him. He may also approach the officer who ordered issuance of LOC & explain that LOC was wrongly issued against him. LOC can be withdrawn by the authority that issued and can also be rescinded by the trial court where case is pending or having jurisdiction over concerned police station on an application by the person concerned. D. LOC is a coercive measure to make a person surrender to the investigating agency or Court of law. The subordinate courts' jurisdiction in affirming or cancelling LOC is commensurate with the jurisdiction of cancellation of NBWs or affirming NBWs." whereafter in terms of order dated 11.08.2010 of this Court, the guidelines, were laid down vide O.M. dated 27.10.2010 No. 25016/31/2010-IMM by the Government of India, Ministry of Home Affairs, Foreigners Division regarding issuance of LOCs with regards to Indian citizens and foreigners. 79. Thus undoubtedly in terms of the said OM dated 27.10.2010 no LOC could have be....
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....by the company M/s Huawei Telecommunications (India) Company Private Limited (HTICPL) is in progress and the respondent having been the Chief Executive Officer; at the relevant time of the alleged commission of the tax evasion to the tune of more than Rs.600 crores, in terms of Section 278B of the Income Tax Act, 1961, is liable to be guilty of the offence committed by the company and to be proceeded against accordingly qua the alleged commission of the offence punishable under Section 276C(1)(i) of the said enactment which is a nonbailable offence punishable with a maximum sentence of 7 years. 83. In terms of the order dated 12.9.2022 in the present petition, the petitioner placed on record in a sealed cover the proposal for the Look Out Circular inter alia in relation to the respondent and the approval thereof as well as the communication dated 19.2.2022 to the Deputy Director, Immigration, Bureau of Immigration (BOI), seeking the issuance of the LOC qua the respondent with Passport No. ED1033977 and the opening of the regular LOC against the respondent on 19.2.2022 whereby the said LOC qua the respondent issued by communication was to remain in force until and unless a deletion....
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....ed (HTICPL) vide directions dated 30.8.2022 of the Hon'ble Division Bench of this Court in W.P.(C) 6352/2022 has adhered to the directions therein of a fixed deposit of Rs.200 crores which is to be renewed automatically from time to time apart from refund of Rs.30 crores to the petitioner having not been directed to be released to the petitioner of that writ petition by the respondent i.e., the Deputy Director of Income Tax (INV.)-4(3), New Delhi i.e., the petitioner herein, the aspect of atleast 230 crores out of the alleged tax evasion of 600 crores as averred in the written submissions of the petitioner dated 14.9.2022 allegedby the accused No.1 in the criminal complaint filed by the petitioner before the ACMM, Special Acts Central District, Tis Hazari Courts stand secured. 86. Undoubtedly vide observations in para 9 of the verdict dated 30.8.2022 in W.P.(C) No. 6352/2022 it had been observed as under: "9. It is made clear that the above order has been passed on the basis of offer made by the Petitioner and will not be considered as a precedent in any other proceeding." and thus the contention raised on behalf of the petitioner that the observation made in Writ Petition(C) N....