Court permits Additional Director to appear in response to summons, emphasizing that only the company can contest search and seizure authorization under Income Tax Act
In a significant judgment delivered on October 6, 2026, the Karnataka High Court addressed the maintainability of a writ petition filed by an Additional Director of a company subjected to search and seizure under Section 247 of the Income Tax Act, 1961. The petitioner, Obedulla A, challenged the authorization for conducting the search and sought interim protection while also requesting reasonable time to respond to multiple summons issued by the Income Tax authorities.
The Court, presided over by Justice B.M. Shyam Prasad, examined whether the Additional Director could personally challenge the search authorization issued against the company, M/s. Attica Gold Private Limited. The petitioner's counsel argued that the authorization was unlawful since it should have been predicated on the failure of the petitioner himself to respond to summons, and that the petitioner was not in possession of any undisclosed asset.
However, the Additional Solicitor General representing the Union of India contended that the search and seizure action was targeted at the company and not at the petitioner in his personal capacity. Therefore, any grievance against the search authorization could only be raised by the affected person - the company itself. The Court found merit in this submission, holding that an Additional Director does not have a personal cause to challenge the authorization issued against the company.
The Court clarified that under Section 247(1) of the Income Tax Act, search and seizure can be authorized if a summons or notice has been issued to a person who has failed to produce required documents or information, or if any person is in possession of undisclosed assets relevant to the proceedings. However, such action against a company must be challenged by the company itself.
While dismissing the writ petition in the personal capacity of the Additional Director, the Court allowed the petitioner to appear in response to the summons dated September 30, 2026, on October 14, 2026, at 11:00 a.m. The Court warned that failure to appear would entitle the authorities to take appropriate legal measures.
This ruling underscores the principle that legal challenges to search and seizure authorizations must be brought by the affected entity and not by individual directors unless they themselves are personally affected. It also affirms the procedural rigor required in Income Tax investigations and the need for affected parties to utilize proper legal channels.
Bottom Line:
Income Tax - Search and seizure - Writ petition by Additional Director of company challenging authorization for search against company - Held, grievance against search and seizure must be raised by affected person, namely the company, and not by Additional Director in his personal capacity - Petition disposed of by permitting petitioner to appear pursuant to summons on specified date.
Statutory provision(s):
Income Tax Act, 1961 Section 247
Obedulla A v. Union of India, (Karnataka) : Law Finder Doc Id # 2993466
