By TIOL News Service

AHMEDABAD, OCT 04, 2018: THE ISSUE IS - Whether when Karta of HUF has already initiated the litigation and persued remedies against the action of Income Tax department, then a member of the HUF individually cannot restart same litigation, in absence of any allegations of misfeasance against the Karta. YES IS THE VERDICT.

Facts of the case:

The assessee is a member of HUF. According to him, a search was carried out by the I-T Authorities at the premises of one Shah Enterprises, a proprietary concern of Keyur P. Shah, wherein, the search warrant of authorization was issued in the name of Shah Finance; Keyur P. Shah and Rakesh K.Shah. These three persons/entities had no concern with either Shah Enterprise or Rakesh K. Shah HUF. Despite this, the authorities seized several cheques belonging to Rakesh K. Shah HUF drawn on Catholic Syrian Bank. On account of such seizure, the cheques could not be deposited within the valid period. Subsequently, proceedings u/s 158BC & 158BD were carried out. This came to be challenged on the ground that, in absence of any search authorization against Rakesh K. Shah HUF, the documents & valuable articles could not have been seized, nor could the said assessee be subjected to proceedings u/s 158BC. Despite various efforts by the Karta of the HUF Rakesh K. Shah, the Department did not release the cheques. Due to such illegal action on the part of Income Tax authorities in seizing the cheques of HUF, huge amounts were lost since the cheques could not be deposited in time.

High Court held that,

++ in the opinion of this court, the assessee being a member of HUF, cannot maintain this litigation. His father Rakesh K. Shah was a Karta of HUF, as stated in the petition, had taken appropriate steps at the relevant time to protect the interest of the HUF. The cause of action arose way back in the year 2001 whereas the assessee has filed this petition in the year 2018 only on the ground that he was born in the year 1997 and therefore attained majority only recently. The Karta of the HUF having initiated the litigation and having persuade the remedies against the action of the Income Tax department, in absence of any allegations of misfeasance at the hands of the Karta, a member of the HUF individually cannot restart the same litigation. The law does not recognize multiple actions at the hands of different members of an HUF long many years after the cause of action had arisen. One of the essential elements of maintaining a writ petition under Article 226 of the Constitution of India which pertains to Court's discretionary powers of issuing writs, is timely action at the ends of assessee. Essentially, the assessee is taking up the cause for and on behalf of the HUF and not in his individual capacity, and therefore, he does not have an independent right to raise the grievances.

(See 2018-TIOL-2049-HC-AHM-IT)