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2022 (1) TMI 553 - DELHI HIGH COURTUndisclosed income - issuance of Look Out Circular (LOC) - pre-condition for issuance of a LOC, fulfilled or not - whether the Court can interfere with the issuance of a LOC or whether it is purely an administrative decision, with which the Court ought not to interfere? - As per the LOC, Undisclosed foreign assets and interests in foreign entities liable for penalty and prosecution under the Income Tax Act - HELD THAT:- Even though the respondents are justified in contending that the scope of judicial review to interfere with the decision of the competent authority issuing a LOC is very limited, it cannot be said that the decision is purely an administrative one or that in no situation can the Court examine the reasons provided by the authority for the issuance of a LOC. When considering a challenge to a LOC, the Courts undoubtedly have a secondary role; and as long as it is found that the decision of the authorities to issue a LOC is a reasonable one, the Court will be circumspect in interfering with the authority’s decision to issue the same - in case, it is found that the decision of the authorities is without application of mind to the relevant factors, the Court can, and in fact, should come to the rescue of the individual - there are no merit in the respondent’s plea that this Court should not examine the legality of the impugned LOC. Whether having made a request for issuance of the LOC under the OM dated 27.10.2010, the respondents can now seek to defend the LOC by relying on a Clause introduced only vide the OM dated 05.12.2017 which for the first time permits issuance of a LOC, even when there is no involvement in a cognizable offence, a pre-condition for issuance of a LOC under the OM dated 27.10.2010? - HELD THAT:- Once a request for issuance of the impugned LOC against the petitioner was made in February 2019, his case was necessarily required to be governed by the OM of 2010, along with all up to date amendments, including the amendment introduced in 2017. The respondent no.3’s action, in referring to the OM of 2010, while forwarding its request for issuance of LOC against the petitioner was therefore in order, and cannot be read in such a restrictive manner so as to imply that, no reference having been made to the OM dated 05.12.2017, it must be presumed that the respondent no.3 never intended to invoke the Clause introduced vide the OM dated 05.12.2017 - respondent’s action, in justifying the issuance of the LOC against the petitioner by relying on the Clause introduced vide the 2017 amendment, can, therefore, not be faulted. Whether the impugned LOC can be held to have lapsed after one year from the date of its issuance or whether the same still continues to hold the field, as urged by the respondent no. 3, for which purpose reliance has been placed on the consolidated guidelines issued by the respondent no. 1, vide it’s OM dated 22.02.2021? - HELD THAT:- Merely because the OM dated 05.12.2017 permits the issuance of a LOC, in exceptional circumstances, even when the individual is not involved in any cognizable offence under the IPC or any other penal law, it has to be remembered that this power, is meant to be used in exceptional circumstances and not as a matter of routine, it must therefore, be interpreted in a manner that indicates an offence of such a magnitude so as to significantly affect the economic interests of the country. Mere suspicion of a person opening bank accounts in other countries and of investing in a foreign company cannot, in my view, be accepted as the basis for holding that the petitioner being allowed to travel abroad would be ‘detrimental to the economic interests of India’, when it is undisputed that this suspicion has remained a suspicion for such a long period of almost three years. Petition allowed.
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