Karta (Manager) of HUF have sole authority over HUF account and also on every transaction on behalf of HUF account, made by each member of the family. Therefore, it is necessary to appoint a new Karta to allow operation in the account after the death of the Karta to allow further operation in the same account.
When the Karta of the HUF has expired then bank account remains the same subject to submission of declaration cum no objection letter to the bank from the new Karta and co-parceners . The letter shall provide the following information.
In case of larger balance in the HUF account many banks obtain affidavit cum indemnity from surviving members and legal heirs with two guarantors confirming their acceptance to one of the members as a new Karta. Banks shall allow the new Karta to continue to operate the existing account on the basis of such documents, in HUF accounts. A similar procedure to be followed in cases where an account is to be closed and balance in the account to be paid to the new Karta. Document requirement may be different in different banks.
The Karta is traditionally the senior most male coparcener of the HUF. When Karta of the HUF dies, the next senior male member takes over as Karta. If the senior most member gives up his right, a junior coparcener can become Karta of the HUF, with the consent of all other major co-parceners as held by Supreme Court in Narendra Kumar J. Modi Vs CIT (1976) 105 ITR 109 (SC).
As per Hindu Succession (Amendment) Act, 2005 the daughters of a family who are governed by Mitakshara Law, also become co-parceners in the HUF property. The above amendment further gave the women the right of survivor ship via amended Section 6 (1) (a) and (b) of Hindu Succession Act, 1956. This amendment gave them equal rights as the sons.
An HUF never dies. After the death of the Karta, normally the eldest coparcerner becomes the Karta. Therefore, the name of the Karta has got to be replaced in the records of the bank. The deposit can be continued and closed on maturity. If it is a SB or Current account, the deposit amount can be withdrawn keeping the minimum balance in the account.HUF account can be closed after disolving the HUF. An HUF can only be dissolved after the full partition of the property. For this, all the co-parcerner and Karta must execute a deed of partition and distribute properties amongst the members.For this, the family must execute a deed of partition and distribute properties amongst the members. .All family members must be part of the deed. The deed should spell out all the properties that are part of the HUF, which family members are dividing among themselves. The division of assets must be in line with the provisions of the Hindu Succession Act.The Income-tax Act does not recognise a partial partition dissolution of HUF. Partition means ‘full partition’. Once the partition of HUF is complete, it will cease to exist. If there is no partition, the income tax department will continue to assess the entity, and the family members will need to file returns.
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