Look Out Notice/Circular against assessee from travelling abroad quashed as no prosecution had been launched.
In a recent case, the Sessions Court quashed Look Out Notice/Circular against the assessee from travelling abroad as no prosecution had been launched and the assessee was not covered under criteria of exceptional cases.
ABCAUS Case Law Citation:
4830 (2025) (11) abcaus.in SsC
In the instant case, the assessee had filed an application for withdrawal/revocation of Look Out Notice/Look Our Circular (LOC) opened against him at the request of Income Tax Office (ITO).
In the instant case five years before a search and seizure action was conducted at the applicant’s residence under section 132 of the Income Tax Act, 1961 (the Act) against a search warrant of a third party namely.
The assessment order passed against the applicant was quashed by the order of CIT(appeals). However, despite that, five years later, while boarding a flight to Dubai the applicant was stopped by Immigration Authorities at Delhi International Airport and was orally informed about the LOC open against him since five years.
Before the Sessions Court, the applicant submitted that the he was never ever informed by the department about any LOC opened against him. However, on coming to know about it, the applicants requested for cancellation of LOC. In reply, he was informed by email about proceedings pending against him under the Black money and Imposition of Tax Act, 2015 and his request for cancellation of LOC was rejected due to non-compliance with notice two issued under section 8 and 10 of the Act.
The applicant stated that in reply to the said email the he reverted that the said notice(s) were never received by him and he was not the beneficial owner of any movable or immovable foreign asset.
It was further submitted that when the applicant filed application in Sessions Court challenging the issuance of LOC, a status report filed by the Department revealed that a notice under section 10 of the Black Money (UFIA) and Imposation of Tax Act, 2015 was issued against the applicant and it was in pursuance of this notice that LOC was issued and subsequently renewed against the applicant. The said notice was uploaded only on the e-portal of the department.
It was prayed by the applicant that there was no ground for keeping the LOC pending against the applicant so the same be quashed/recalled.
The respondent Income Tax Officer vehemently opposed the application stating that the applicant was a flight risk. It was argued that in case the applicant was allowed to go abroad then he may dispose of the foreign assets and may tamper with evidence thereby jeopardizing the investigation. He prayed that the application be dismissed being bereft of merit.
The Sessions Court observed that investigation under Section 51 of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is pending against the applicant.
The Court observed that the legal position in this regard has been settled by the Hon’ble Delhi High Court who have formulated the following questions and addressed them with regard to Look Out Notice :
| Questions | Answers | |
| (a) | What are the categories of cases in which the investigating agency can seek recourse of Look-out-Circular and under what circumstances? | 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) | What procedure is required to be followed by the investigating agency before opening a Look-out-Circular? | 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) | What is the remedy available to the person against whom such Look-out-Circular has been opened | 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 he 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) | 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? | 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 |
The Sessions Court observed that 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.
It was further observed by the Sessions Court that it was not the case of the Income Tax Office that the applicant was not appearing before it during investigation or was deliberately avoiding arrest. Rather the applicant was duly co-operating with the investigating officer. It was an entirely another matter that the answers given by the applicant may have been deemed to be evasive and unsatisfactory. It was also apparent from the application and undisputed by the respondent that the search and seizure was conducted five years before and LOC was also opened then of which the applicant was unaware and after that the applicant attempted to travel out of India only after five years. Prior to that he never tried to travel abroad despite the fact of search and seizure and consequent proceedings against him before the Income Tax Authorities.
The Court further observed that it was not disputed by the respondent that there was no outstanding demand against the accused as on date and no prosecution had been launched by the respondent against the respondent till date.
The Court further observed that Hon’ble Delhi High Court had held that any allegation made against the accused that his conduct is evasive and non-cooperative cannot be a ground for issuance of LOC against him.
The Court further observed that Ministry of Home Affairs issued an Office Memorandum dated 27.10.2010 laying down the guidelines for issuance of Lookout Circulars. The above said answered given by the Delhi High Court have been incorporated in the amended Office Memorandum No. 25016/10/2017-IMM dated. 05.12.2017 which made the following additional to the extant guideline,
“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 the departure of such person is detrimental to the sovereignty or 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, 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 public interest at any given point of time.”
Furthermore, an Office Memorandum No.25016/10/2017-Imm(Pt.) dated 22.02.2021 consolidating all the guidelines for issuance of LOC has been issued by Ministry of Home Affairs, Government of India.
The Sessions Court opined that the applicant does not come within the additional criteria as the departure of applicant from India cannot be stated to be detrimental to sovereignty, security and integrity of India, it was also not detrimental to bilateral relations with any other country or to strategic and/or economic interest of India. It was 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 against him. Moreover, in the present case the department had not launched prosecution against the applicant.
The Sessions Court further stated that a blanket ban on foreign visits of the applicant was not desirable especially considering the fact that the Apex Court has held right to travel abroad to be a fundamental right guaranteed under Article 21 of the Constitution of India.
Accordingly, the Sessions Court held that no ground was made out to keep LOC open against the applicant. Accordingly, the LOC against the applicant was revoked subject to the condition that he shall give prior intimation to the concerned department each time he would travel abroad. Apart from that there shall be no restrictions on the applicant with regard to his travelling abroad.
Download Full Judgment Click Here >>
- Audit Objections can be basis for reopening but ignoring reply is non application of mind
- Look Out Notice/Circular by Income Tax Office against travelling abroad quashed
- ITAT gives relief to Aishwarya Rai Bachchan by accepting suo-moto disallowance u/s 14A
- ITAT deleted addition of amount borrowed for treatment of father and deposited in bank
- When income determined is below exemption limit, section 115BBE not applicable
