ALAY RAKESH SHAH V. DEPARTMENT OF INCOME TAX

SCA/13477/2018

AI Insights

The case involves Alay Rakesh Shah, a member of the Hindu Undivided Family (HUF) Rakesh K. Shah HUF, who filed a petition against the Department of Income Tax for the seizure of cheques belonging to the HUF. The cheques were seized during a search operation authorized by a warrant that did not specifically name the HUF or its Karta, Rakesh K. Shah. The petitioner argued that the seizure was illegal and sought compensation for the losses incurred due to the inability to deposit the cheques in time. The court dismissed the petition, citing the lack of independent grounds for the member of the HUF to initiate such a claim after a considerable delay, especially when the Karta had already addressed the issues.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 751096 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 24-09-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: MOHINI DAVE
• Keywords: Hindu Undivided Family; Illegal action; Income Tax; Search and seizure; Consumer District Redressal Commission
• Section: 158BC; 158BD

Judgement Text

"C/SCA/13477/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 13477 of 2018 ========================================================== ALAY RAKESH SHAH Versus DEPARTMENT OF INCOME TAX ========================================================== Appearance: MOHINI H DAVE(7849) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 24/09/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Petitioner is a member of one Hindu Undivided Family ('HUF' for short) i.e. Rakesh K. Shah HUF. He has prayed that the respondents i.e. the Union of India and Income Tax department be directed to pay to him a sum of Rs.33,51,29,256/­. This prayer arises in following background. 2. According to the petitioner, a search was carried out by the Income Tax authorities at the premises of one Shah Enterprises, a proprietary concern of Keyur P. Shah. According to the petitioner, the search warrant of authorization dated 29.11.2000 was issued in the name of i) Shah Finance; ii)Keyur P. Shah and iii)Rakesh K.Shah. These three persons/entities had no concern with either Shah Enterprise or Rakesh K. Shah HUF. Despite this, the Page 1 of 4 C/SCA/13477/2018 ORDER authorities seized several cheques belonging to Rakesh K. Shah HUF drawn on Catholic Syrian Bank ('the bank' for short). On account of such seizure the cheques could not be deposited within the valid period. Subsequently, proceedings under section 158BC and 158BD of the Income Tax Act, 1961 ('the Act' for short) was carried out against various assessees. According to the petitioner, in absence of any search authorization against Rakesh K. Shah HUF, the documents and valuable articles could not have been seized, nor could the said assessee be subjected to proceedings under section 158BC of the Act. Despite various efforts by the Karta of the HUF Rakesh K. Shah, the department did not release the cheques. The petitioner would point out that initially complaint was filed before the Consumer District Redressal Commission, Gujarat, against the bank. The Commission however, held that the remedy of the assessee did not lie against the bank but only against the Income Tax department. Appeal filed against such judgment of the Commission failed. Subsequently also, multiple applications and representations were made by the Karta of the HUF to Page 2 of 4 C/SCA/13477/2018 ORDER the Income Tax department without any success. Case of the petitioner therefore is that due to such illegal action on the part of the Income Tax authorities in seizing the cheques of the HUF, huge amounts were lost since the cheques could not be deposited in time. The petitioner has therefore raised multiple claims against the Income Tax department which include the principal amounts indicated in the cheques with interest computed at the rate of 18% per annum and also damages for such treatment meted out by the Income Tax department. 3. In our opinion, 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. 4. The Karta of the HUF having initiated the litigation and having persuade the remedies against Page 3 of 4 C/SCA/13477/2018 ORDER 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. 5. In the result, petition is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH Page 4 of 4 "