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The high court was informed that the Income Tax Department had issued a LOC since the petitioner had assessment proceedings against him. The department informed the court that the petitioner was not answering the phone nor was he found at the residence or office.
A division bench of the Bombay High Court comprising Justice GS Patel and Justice Neela Gokhale recently observed that income tax assessment proceedings under the Income Tax Act do not justify preventing a person's fundamental right to travel overseas.
“The fact that there is an assessment proceeding does not always or invariably justify the issuance of an LOC, nor does it justify preventing a Petitioner from traveling overseas in exercise of well-settled fundamental rights,” the bench observed.
The high court was hearing a petition filed by a promoter of a group company, who encountered a Look Out Circular (LOC) while attempting to travel overseas on May 31, 2023. The LOC was issued by the Deputy Director of Income Tax.
Representing the petitioner, Senior Advocate Atul Rajadhyaksha argued that the LOC was issued against the petitioner and his family without any expiry date, and it would remain in force until a deletion request is received from the originator. He further contended that there were no pending proceedings with the authority that could have triggered the issuance of the LOC.
The court was informed that after the assessing officer was made aware of the LOC's status, he declared that the LOC would continue until March 31, 2024, which is the due date for the completion of assessment proceedings.
Advocate Swapna Gokhale appearing for the tax department submitted that the reason the LOC had to be issued was that there was a period during which the petitioner could not be contacted. She submitted that neither the petitioner answered his phone nor was he found at his residence or office.
The petitioner provided an undertaking before the court, pledging full cooperation with the tax authorities and the assessing officer. He assured the court that he would make himself available whenever required to respond to all queries during the assessment proceedings.
Following the proceedings, the division bench granted permission to the tax department to file its reply by August 23, 2023, and directed the petitioner to file a rejoinder by September 6, 2023.
In the interim, the high court stayed the Look Out Circular (LOC) until August 23, 2023, allowing the petitioner to travel outside of India.
However, the petitioner was required to submit their travel itinerary and commit to returning to India as scheduled. Additionally, the court instructed the petitioner not to seek an extension of the order until their return to India.
Case title: Achal Ramesh Chaurasia vs Deputy Director of IT & Ors.
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