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Delhi High Court - Orders

Income Tax Dept vs Vikas Chaudhary And Ors on 3 February, 2022

Author: Jyoti Singh

Bench: Chief Justice, Jyoti Singh

                          $~15
                          *    IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +      LPA 78/2022
                                 INCOME TAX DEPT.                        ..... Appellant
                                              Through: Mr. Zoheb Hossain, Senior Standing
                                              Counsel with Mr. Vipul Agrawal and Mr. Parth
                                              Senwal, Advocates

                                                 versus
                                 VIKAS CHAUDHARY AND ORS.                  ..... Respondents
                                             Through: Mr. Vikas Pahwa and Mr. Sandeep
                                             Sethi, Senior Advocates with Mr. Shadman
                                             Ahmed Siddiqui, Mr. Samjyor Lepcha,
                                             Mr.Kushagra Raghuvanshi and Mr. Arshdeep
                                             Singh Khurana, Advocates for R-1.
                                             Mr. Anurag Ahluwalia, Central Government
                                             Standing Counsel with Mr. Danish Faraz Khan and
                                             Mr. Rishab Narayan, Advocates for R-2 & 3.

                                 CORAM:
                                 HON'BLE THE CHIEF JUSTICE
                                 HON'BLE MS. JUSTICE JYOTI SINGH
                                                           ORDER

% 03.02.2022 Proceedings have been conducted through video conferencing. C.M.No.5853/2022 (exemptions) Allowed, subject to all just exceptions.

Application is disposed of.

LPA 78/2022 & C.M.No.5852/2022(stay) Issue notice.

Mr. Shadman Ahmed, learned counsel accepts notice on behalf of Respondent No.1.

Mr. Anurag Ahluwalia, learned Central Government Standing Counsel accepts notice on behalf of Respondents No.2 and 3.

Learned counsels appearing for the Respondents seek time to file their respective replies to the appeal, as according to them, the averments made and the allegations levelled in the appeal are factually and legally incorrect and need to be controverted.

Let the Respondents file their respective replies to the appeal, before the next date of hearing.

Present appeal has been preferred by original Respondent No.3/Income Tax Department assailing the judgment and order dated 12.01.2022, passed by the learned Single Judge in W.P.(C) No.5374/2021 (Annexure A-1 to the memo of this appeal).

Learned counsel appearing on behalf of the Appellant contends that the Learned Single Judge has erroneously quashed the Look Out Circular (hereinafter referred to as the 'LOC') issued against Respondent No.1 herein inter alia on the ground that the LOC has not been issued in terms of the Office Memorandum dated 05.12.2017 and that the circumstances of the case did not show that the LOC could be issued due to actions 'detrimental to the economic interests of the country'. It is contended that the judgment is in direct contravention of the consolidated LOC Guidelines issued vide OM dated 22.02.2021 providing that no LOC shall be deleted automatically and shall remain in force until and unless a deletion request is received from the Originator.

It is next contended that the Learned Single Judge has failed to appreciate that during the course of search and survey operations, incriminating documents/evidences have been found against Respondent LPA 78/2022 Page 2 of 5 Signature Not Verified AMIT NARAYAN BHARTHUAR Location: Signing Date:03.02.2022 21:03:16 No.1. Attention of the Court is drawn to an order passed by another Learned Single Judge of this Court in W.P.(Crl.) No.1558/2021, which is appended as Annexure A-14 to the present appeal, wherein a detailed affidavit has been filed by the Income Tax Department, bringing on record the pending investigations and the assessment proceedings as well as the fact that there are tax evasions by Respondent No.1 herein and the petition is pending. It is further submitted that bogus purchases to the tune of Rs.1153 Crores have been identified in the hands of three entities belonging to Respondent No.1 herein. It is also the submission of Mr. Zoheb that during the course of search by the Appellant, a draft agreement for an offshore company in the name of M/s. Centurion International Limited registered in Dubai was found, as per which Respondent No.1 bought 10% shares in the company for Rs.30 Crores from one Mr. Amit Agarwal, in the name of his daughter with respect to a property situated in Dubai and is, therefore, contrary to the plea of Respondent No.1 before the Learned Single Judge that only a sum of 7,50,000 AED/INR 1,53,90,000 was paid as advance for purchase of shares, which, however, is claimed by Respondent No.1 to have been received back as the transaction did not materialise.

Mr. Zoheb next contends that assessment for two Assessment Years being 2018-19 and 2019-20 for the individual is complete while the same is pending with respect to the companies. 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 LPA 78/2022 Page 3 of 5 Signature Not Verified AMIT NARAYAN BHARTHUAR Location: Signing Date:03.02.2022 21:03:16 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 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 Affairs-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 rightly quashed the LOC. It is also submitted that Respondent No.1 is a businessman and is required to travel frequently for the conduct of his business and there is no question of his fleeing from the country or evading the process of law. It is also submitted that a detailed reply shall be filed by Respondent No.1, which will bring forth the falsity of the stand of the Appellant, including the fact that the figures cited by them are highly exaggerated.

Having heard the learned counsel for the Appellant and the learned Senior Counsels for Respondent No.1, in our view, Appellant has made out a prima facie case for grant of interim relief. The balance of convenience is also in favour of the Appellant and in case the impugned judgment is not stayed, irreparable loss shall be caused to the Appellant. We, accordingly, stay the operation, implementation and execution of the impugned judgment dated 12.01.2022, passed by the learned Single Judge in W.P.(C) 5374/2021, till the next date of hearing.

Respondent No.1 is hereby directed to deposit his passport with the Learned Registrar General of this Court, latest by 5.00 PM on 04.02.2022. The passport shall be kept by the Learned Registrar General in safe custody in a sealed cover.

Since it is the stand of the Learned Senior Counsels appearing on behalf of Respondent No.1 that on account of business constraints, he is required to frequently travel abroad, we grant liberty to Respondent No.1 to file an appropriate application as and when the need arises to travel abroad, detailing the reasons therein. Needless to state, as and when such an application is preferred, the same shall be decided, based on facts and circumstances brought forth and in accordance with law.

List on 15.03.2022.

CHIEF JUSTICE JYOTI SINGH, J FEBRUARY 03, 2022 'anb' LPA 78/2022 Page 5 of 5 Signature Not Verified AMIT NARAYAN BHARTHUAR Location: Signing Date:03.02.2022 21:03:16