There is a look-out circular against me while my Black Money Act appeal is pending. Can I get it lifted, and does the appeal need money deposited first?
The look-out circular was not quashed but was converted into an intimation of arrival and departure under clause 6(I) of the Office Memorandum dated 22 February 2021, on conditions including security over property, the Court holding that this was not a case detrimental to the economic interest of the country as there was no allegation of siphoning of public funds and no criminal proceedings had been initiated despite the demand. On the appeal, the Court recorded that no amount had been deposited under Rule 6(4) of the Black Money Rules, which requires the tax with penalty and interest on the liability not objected to by the assessee to be paid before an appeal under s.15(1) is admitted.
Decided by the High Court (Prathiba M. Singh J) on 2023-09-26, reported as W.P.(C) 10998/2022 and CM APPL. 41138/2022. It bears on section BMA s.15, section BMA s.15(1), section BMA Rule 6(4), section BMA s.10(1), section BMA s.10(3), section BMA s.8, section BMA s.41, section BMA s.59, section 153A, section 153C of the Income Tax Act 1961, in Appeals, Demand, Recovery & Stay and Assessment & Scrutiny matters.
The only decision located that sets out what Rule 6(4) requires before an appeal under s.15 is admitted, and the reading contended for - that only an unobjected liability has to be deposited - is recorded in the Court's own narration of the position. On the travel point it gives the test that is actually applied to a look-out circular founded on a tax demand: economic interest of the country, siphoning of public funds and the presence or absence of a prosecution.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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An assessment order under s.10(3) of the Black Money Act dated 30 March 2022 assessed undisclosed foreign income of Rs 1,87,85,00,650.10 and raised a demand of Rs 56,35,50,210. Demands of about Rs 66.48 crore under s.153A and Rs 5.35 crore under s.153C of the Income-tax Act had also been raised, and a penalty order of about Rs 169 crore had been set aside. The petitioner had filed an appeal against the Black Money Act assessment which was pending before the Commissioner (Appeals), but had deposited nothing under Rule 6(4) of the Black Money Rules. A look-out circular was in force against him. He contended that Rule 6(4) required a deposit only of a liability not objected to by the assessee.
The look-out circular against the petitioner stands modified to an intimation, on conditions that the relevant authorities be informed of his arrival and departure on every occasion and that specified properties of his parents be offered as security (para 111). The Court held this was not a case detrimental to the economic interest of the country as there was no allegation that the petitioner had siphoned off any public funds (para 106), and treated as an important consideration the fact that no criminal proceedings had been initiated against him despite the demand having been raised (para 107). The circular debarring him from travelling was converted into an intimation about his arrival and departure in terms of clause 6(I) of the Office Memorandum of 2021 (para 110).
The Court worked within the consolidated guidelines in the Office Memorandum dated 22 February 2021, under which a look-out circular in an income-tax or Black Money Act matter is permissible only where departure would threaten the economic interests of India, a threshold the Court found unmet. Clause 6(I) provided the middle course of an intimation rather than a bar, which the Court adopted, securing the revenue by conditions instead. On the appeal, the Court recorded at para 96 that the petitioner had filed an appeal against the assessment order which was pending before the Commissioner (Appeals), that no amount had been deposited in terms of Rule 6(4), and that Rule 6(4) requires the deposit of tax along with penalty and interest on the amount of liability which has not been objected to by the assessee in order to admit an appeal preferred under s.15(1).
there is no allegation that the Petitioner has siphoned off any public funds
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Handle my notice → Ask a CA on WhatsAppThe look-out circular was not quashed but was converted into an intimation of arrival and departure under clause 6(I) of the Office Memorandum dated 22 February 2021, on conditions including security over property, the Court holding that this was not a case detrimental to the economic interest of the country as there was no allegation of siphoning of public funds and no criminal proceedings had been initiated despite the demand. On the appeal, the Court recorded that no amount had been deposited under Rule 6(4) of the Black Money Rules, which requires the tax with penalty and interest on the liability not objected to by the assessee to be paid before an appeal under s.15(1) is admitted. This was decided by the High Court (Prathiba M. Singh J) and bears on section BMA s.15, section BMA s.15(1), section BMA Rule 6(4), section BMA s.10(1), section BMA s.10(3), section BMA s.8, section BMA s.41, section BMA s.59, section 153A, section 153C of the Income Tax Act 1961. It is reported as W.P.(C) 10998/2022 and CM APPL. 41138/2022. The only decision located that sets out what Rule 6(4) requires before an appeal under s.15 is admitted, and the reading contended for - that only an unobjected liability has to be deposited - is recorded in the Court's own narration of the position. On the travel point it gives the test that is actually applied to a look-out circular founded on a tax demand: economic interest of the country, siphoning of public funds and the presence or absence of a prosecution. If it applies to you, the first step is this: Before filing an appeal under s.15, identify the part of the liability you do not object to and deposit the tax with penalty and interest on that part; otherwise the appeal may not be admitted.
An assessment order under s.10(3) of the Black Money Act dated 30 March 2022 assessed undisclosed foreign income of Rs 1,87,85,00,650.10 and raised a demand of Rs 56,35,50,210. Demands of about Rs 66.48 crore under s.153A and Rs 5.35 crore under s.153C of the Income-tax Act had also been raised, and a penalty order of about Rs 169 crore had been set aside. The petitioner had filed an appeal against the Black Money Act assessment which was pending before the Commissioner (Appeals), but had deposited nothing under Rule 6(4) of the Black Money Rules. A look-out circular was in force against him. He contended that Rule 6(4) required a deposit only of a liability not objected to by the assessee. The matter was decided on 2023-09-26 by the High Court (Prathiba M. Singh J). On those facts the High Court held as follows. The look-out circular against the petitioner stands modified to an intimation, on conditions that the relevant authorities be informed of his arrival and departure on every occasion and that specified properties of his parents be offered as security (para 111). The Court held this was not a case detrimental to the economic interest of the country as there was no allegation that the petitioner had siphoned off any public funds (para 106), and treated as an important consideration the fact that no criminal proceedings had been initiated against him despite the demand having been raised (para 107). The circular debarring him from travelling was converted into an intimation about his arrival and departure in terms of clause 6(I) of the Office Memorandum of 2021 (para 110).
The Court worked within the consolidated guidelines in the Office Memorandum dated 22 February 2021, under which a look-out circular in an income-tax or Black Money Act matter is permissible only where departure would threaten the economic interests of India, a threshold the Court found unmet. Clause 6(I) provided the middle course of an intimation rather than a bar, which the Court adopted, securing the revenue by conditions instead. On the appeal, the Court recorded at para 96 that the petitioner had filed an appeal against the assessment order which was pending before the Commissioner (Appeals), that no amount had been deposited in terms of Rule 6(4), and that Rule 6(4) requires the deposit of tax along with penalty and interest on the amount of liability which has not been objected to by the assessee in order to admit an appeal preferred under s.15(1). In the words reproduced by the source cited on this page: "there is no allegation that the Petitioner has siphoned off any public funds"
It was decided by the High Court on 2023-09-26 and is reported as W.P.(C) 10998/2022 and CM APPL. 41138/2022. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section BMA s.15, section BMA s.15(1), section BMA Rule 6(4), section BMA s.10(1), section BMA s.10(3), section BMA s.8, section BMA s.41, section BMA s.59, section 153A, section 153C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The look-out circular against the petitioner stands modified to an intimation, on conditions that the relevant authorities be informed of his arrival and departure on every occasion and that specified properties of his parents be offered as security (para 111). The Court held this was not a case detrimental to the economic interest of the country as there was no allegation that the petitioner had siphoned off any public funds (para 106), and treated as an important consideration the fact that no criminal proceedings had been initiated against him despite the demand having been raised (para 107). The circular debarring him from travelling was converted into an intimation about his arrival and departure in terms of clause 6(I) of the Office Memorandum of 2021 (para 110). It arises in Appeals, Demand, Recovery & Stay and Assessment & Scrutiny matters, on section BMA s.15, section BMA s.15(1), section BMA Rule 6(4), section BMA s.10(1), section BMA s.10(3), section BMA s.8, section BMA s.41, section BMA s.59, section 153A, section 153C of the Income Tax Act 1961, and was decided by Prathiba M. Singh J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where the whole liability is objected to, be ready to argue that Rule 6(4) requires a deposit only of what is not objected to. Against a look-out circular, show the absence of a prosecution and of any allegation that public funds were siphoned off. Ask in the alternative for conversion of the circular into an intimation under clause 6(I) of the Office Memorandum of 22 February 2021, and be ready to offer security.
Searched for later treatment; none was found. That is not the same as a source affirming it. Decided 26 September 2023. Nothing applying, doubting or overruling it was located. The look-out circular jurisprudence in this area also includes Preetha Krishna (Madras High Court, 7 September 2020), which the library holds and which turns on the omission of s.230 of the Income-tax Act from s.84 of the Black Money Act; the two decisions are not cited to each other on the pages read. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The Court did not decide the meaning of Rule 6(4). What appears at para 96 is the Court's statement of the position, and the reading that only an unobjected liability must be deposited appears at para 30(C) as counsel's submission. The decision on the merits is about the look-out circular. The assessment years to which the demands relate are not set out in the text read. Paragraph 111 as reproduced lists two conditions and breaks off at the description of the properties offered as security; the full terms should be read before they are relied on. No reporter citation is printed on the pages read. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The look-out circular against the petitioner stands modified to an intimation, on conditions that the relevant authorities be informed of his arrival and departure on every occasion and that specified properties of his parents be offered as security (para 111). The Court held this was not a case detrimental to the economic interest of the country as there was no allegation that the petitioner had siphoned off any public funds (para 106), and treated as an important consideration the fact that no criminal proceedings had been initiated against him despite the demand having been raised (para 107). The circular debarring him from travelling was converted into an intimation about his arrival and departure in terms of clause 6(I) of the Office Memorandum of 2021 (para 110).
TaxSphere, “Prateek Chitkara v Union of India”, https://taxnotice.vittsphere.com/caselaw/case/prateek-chitkara-v-uoi-bma-rule-6-4-deposit-and-look-out-circular/ (validity last checked 2026-09-16)
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