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2021 (3) TMI 80 - HC - Income TaxConstitutional validity of Section 206AA - Requirement to furnish Permanent Account Number (PAN) - Applicability for the person having non-taxable income - Single Judge while dealing with a challenge to the constitutional validity of Section 206AA held that it is inapplicable to the persons whose income is less than taxable limit as per Finance Act, 1991 and the Banking and Financial Institutions shall not invariably insist upon Permanent Account Number (PAN) from small investors like respondent Nos.1 to 3 as well as from persons who intend to open an account in a Bank or Financial Institution HELD THAT:- Section 206AA of the Act is enacted as a measure to prevent the tax evasion. The Government of India is trying to eliminate circulation of unaccounted money and is intending to set up a database which contains and monitor all the transactions which take place in India. In order to gather the information for the aforesaid database, the appellants are insisting on furnishing of Permanent Account Number in all the transactions. The contention of the petitioner that Section 206AA of the Act takes away the benefit conferred by Sections 139A(1)(i) and 197A of the Act is misplaced. Section 139A(1)(i) of the Act provides that a person shall apply for allotment of Permanent Account Number if his total income or total income of any other person in respect of which he is assessable under the Act during the Previous Year exceeded the maximum amount which is not chargeable to income tax. Section 139(1)(i) is not absolute and apart from persons mentioned in the aforesaid clause, there are number of instances in Section 139A itself where persons are required to obtain Permanent Account Number even if they do not fulfill the conditions mentioned in Section 139A(1)(i) of the Act. For instance, a person is required to obtain Permanent Account Number if turnover of his business is exceeded ₹ 5 Lakhs irrespective of the fact whether his total income exceeded maximum amount chargeable to tax or not. Conclusion recorded by the learned Single Judge that the persons whose total income do not exceed maximum amount and are not chargeable to tax need not obtain Permanent Account Number to the exclusion of others cannot be upheld. Single Judge has neither recorded a finding that the parliament do not have the legislative competence to enact Section 206AA of the Act nor has not recorded a finding that the aforesaid provision is violative of fundamental rights. The Principle of reading down a provision can be applied for the limited purpose of making a particular provision workable and to bring it in harmony with the other provisions of the statute and has to be used keeping in view the scheme of the Act and to fulfill its purposes [See: 'CALCUTTA GUJ. EDUCATION SOCIETY & ANR. VS. CALCUTTA MUNICIPAL CORPORATION & ORS.' 2003 (8) TMI 476 - SUPREME COURT]. In the fact situation of the case, since, the provision was either not unworkable nor was inconsistent with other provisions of the Act, therefore, the learned Single Judge could not have applied the principle of reading down merely on the basis of hardship or equity which are not relevant in interpretation of the law relating to taxation. The impugned order passed by the learned Single Judge cannot be sustained in the eye of law
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