2018 (9) TMI 1636 - HC - Income Tax

Proceedings under section 158BC and 158BD - proceedings against Karta of HUF - seizure of several cheques belonging to Rakesh K. Shah HUF drawn on Catholic Syrian Bank - petitioner right to maintain petition on behalf of karta - Held that - The petitioner cannot maintain this litigation. The petitioner is a member of HUF. 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. The petitioner 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 the petitioner. The petitioner cannot file a writ petition 17 years later on the ground that he only recently attained majority. Essentially, the petitioner is taking up the cause for and on behalf of the HUF and not in his individual capacity. The Karta of the family was at the helm of the affairs at the relevant time. The petitioner does not have an independent right to raise the grievances.

Summary

Issues:
1. Petitioner seeking direction for payment from Union of India and Income Tax department.
2. Seizure of cheques belonging to HUF during Income Tax search.
3. Allegations of illegal action by Income Tax authorities causing financial loss.
4. Petitioner's right to maintain the litigation as a member of HUF.

Analysis:

1. The petitioner, a member of a Hindu Undivided Family (HUF), sought a direction for payment from the Union of India and Income Tax department amounting to ?33,51,29,256. The claim stemmed from a search conducted by the Income Tax authorities at Shah Enterprises, where cheques belonging to the petitioner's HUF were seized. Despite efforts to recover the cheques, the petitioner faced challenges due to the actions of the Income Tax department.

2. The petitioner argued that the seizure of cheques belonging to the HUF was unauthorized as there was no search authorization against the HUF. This led to financial losses as the cheques could not be deposited within the valid period. The petitioner contended that the Income Tax authorities acted illegally, causing significant harm to the HUF's financial interests.

3. The Court noted that the petitioner, as a member of the HUF, could not maintain the litigation independently. The Karta of the HUF had already taken steps to address the issue when it arose in 2001. The Court emphasized that the petitioner's claim, filed in 2018 after attaining majority, was untimely. It was highlighted that the law does not allow multiple actions by different members of an HUF years after the cause of action arose.

4. The judgment emphasized that the petitioner was essentially representing the HUF's interests, and without any allegations of misfeasance by the Karta, individual members of the HUF cannot initiate separate litigations. The Court underscored the importance of timely action in maintaining a writ petition under Article 226 of the Constitution of India. As the Karta had already pursued remedies against the Income Tax department, the petitioner's attempt to restart the litigation was deemed impermissible.

5. Consequently, the Court dismissed the petition, ruling that the petitioner, as a member of the HUF, could not independently raise grievances through a writ petition 17 years after the cause of action had arisen. The judgment highlighted the need for timely action and the recognition of the Karta's role in representing the HUF's interests in legal matters.