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Mr. Thiagarajan Kumararaja Versus Union of India, The Central Board of Direct Taxes, The Income Tax Officer

2017 (11) TMI 584 - MADRAS HIGH COURT

Requirement of AADHAAR number in filing return of income - petitioner seeking permission to file his income tax returns AY 2017-18 either manually or through appropriate e-filing facility without insisting the petitioner to produce his aadhaar card and/or enrollment ID as defined under Section 139AA - Constitutional validity of Section 139AA - Held that:- After rendering the above finding, it was observed that though the PAN is issued under the provisions of Section 139A of the Act, its function .....

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d in the absence of a PAN, it will be impossible to undertake any of the activities, though its requirement is aimed at curbing the tax evasion. It was further observed that if the PAN of a person is withdrawn or is nullified, it definitely amounts to placing restrictions on the right to do business. - On a reading of the quoted paragraphs in the decision in the case of Binoy Viswam, [2017 (6) TMI 478 - SUPREME COURT OF INDIA] it would clearly show that the Hon'ble Supreme Court has not stay .....

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income tax returns is a plea, which is not sustainable and is liable to be rejected. - W.P.No.28181 of 2017 & WMP.No.30311 of 2017 - Dated:- 6-11-2017 - T. S. Sivagnanam, J. For the Petitioner : Mr. V. Prashankiran For the Respondent : Mr. Rabu Manohar, SPCCG Mr.G.Rajagopalan, ASG assisted by Mrs.Hema Muralikrishnan ORDER Heard V.Prashanthkiran, learned counsel for the petitioner, Mr.Rabu Manohar, learned Senior Panel Counsel for the Central Government and Mr.G.Rajagopalan, learned Additional S .....

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by this Court on 31.10.2017, which is quoted herein below : "Heard Mr.Suhrith Parthasarathy, learned counsel for the petitioner. 2. The petitioner before this Court is a practicing advocate and she has filed this writ petition praying for a direction to the third respondent to allow her to file income tax returns for the assessment year 2017-18 either manually or through e-filing facility without insisting for production of an aadhar number/card or enrollment identity as defined under Secti .....

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1, till the aforesaid aspect of Article 21 is decided by the Constitution Bench, a partial stay of the aforesaid proviso is necessary. In respect of those assessees, who do not have an aadhar card and who do not comply with the provisions of Section 139AA(2), it was held that their PAN cards cannot be treated as invalid for the time being. 4. The matter has now been referred to a Constitution Bench, which is to hear the matter sometime by the end of November 2017. It is seen that in identical ci .....

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nce today being the last date for filing the income tax returns. If the income tax returns are filed belatedly and if, ultimately, the matter is decided by the Constitution Bench of the Hon'ble Supreme Court against the petitioner, then she may be liable for payment of interest for belated payment of tax. The balance of convenience is in favour of the petitioner for the grant of appropriate interim order. 5. Accordingly, there will be an interim direction to the third respondent to permit th .....

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ncome tax returns for the assessment year 2017-18 either manually or through appropriate e-filing facility without insisting the petitioner to produce his aadhaar card and/or enrollment ID as defined under Section 139AA of the Income Tax Act, 1961 (hereinafter called the Act) and not to initiate coercive action against the petitioner. 4. The petitioner's case rests upon the decision of the Hon'ble Supreme Court in the case of Binoy Viswam Vs. Union of India [reported in (2017) 396 ITR 66 .....

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d as invalid until the Supreme Court hears and determines the larger challenge, in which, the validity of the Aadhaar Act has been assailed. 5. It is his further submission that on a reading of the judgment of the Hon'ble Supreme Court in the case of Binoy Viswam, it is clear that the respondents cannot insist that persons like the petitioner, who have not enrolled under the Aadhaar Act and who do not wish to enroll themselves, must quote their aadhaar number or their enrollment ID in order .....

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Hon'ble Supreme Court in the case of Binoy Viswam and that the Hon'ble Supreme Court has not granted stay of Section 139AA(2) of the Act, but its validity has been upheld and the limited stay, which was granted by the Hon'ble Supreme Court, was only to facilitate other transactions, which are mentioned in Rule 114B of the Income Tax Rules, 1962 (hereinafter called the Rules). Therefore, the Hon'ble Supreme Court having upheld the provisions of Section 139AA of the Act, the parti .....

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ment under aadhaar card is voluntary, however, for the purposes of the Act, Section 139AA makes it compulsory that for assessees to give aadhaar number, which means that in so far as income tax assessees are concerned, they have to necessarily enroll themselves under the Aadhaar Act and obtain aadhaar number, which will be their identification number, as that has become the requirement under the Act. 9. It has been further held by the Hon'ble Supreme Court in Binoy Viswam that the contention .....

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round that it is impermissible only because under the Aadhaar Act, the provision is directory in nature. The Hon'ble Supreme Court also held that it is the prerogative of the Parliament to make a particular provision directory in one Statute and mandatory/compulsory in the other and that by itself cannot be a ground to question the competence of the Legislature. 10. In paragraphs 113 and 114 of the judgment, the Hon'ble Supreme Court, in order to consider the submissions advanced, bifurc .....

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ate. 114. Insofar as first limb of Section 139AA of the Act is concerned, we have already held that it was within the competence of the Parliament to make a provision of this nature and further that it is not offensive of Article 14 of the Constitution. This requirement, per se, does not find foul with Article 19(1)(g) of the Constitution either, inasmuch as, quoting the Aadhaar number for purposes mentioned in Sub-Section (1) or intimating the Aadhaar number to the prescribed authority as per t .....

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e, that the consequences provided will have the effect of paralysing the right to carry on business/ profession. Therefore, thrust is on the second part of Section 139AA of the Act, which we proceed to deal with, now." 11. After rendering the above finding, it was observed that though the PAN is issued under the provisions of Section 139A of the Act, its function is not limited to giving this number in the income tax returns or for other acts to be performed under the Act as mentioned in Su .....

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e tax evasion. It was further observed that if the PAN of a person is withdrawn or is nullified, it definitely amounts to placing restrictions on the right to do business. 12. Then, the Hon'ble Supreme Court proceeded to frame the question as to whether these restrictions are reasonable and meet the requirement of Clause (6) of Article 19. After referring to the decision in the case of Modern Dental College and Research Centre Vs. State of Madhya Pradesh [reported in 2016 (7) SCC 353], proce .....

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he provision is aimed at seeding Aadhaar with PAN. We have already held, while considering the submission based on Article 14 of the Constitution, that the provision is based on reasonable classification and that has nexus with the objective sought to be achieved. One of the main objectives is to de-duplicate PAN cards and to bring a situation where one person is not having more than one PAN card or a person is not able to get PAN cards in assumed/fictitious names. In such a scenario, if those p .....

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tating the consequences for not complying with the requirements of Section 139AA of the Act, more particularly when these requirements are found as not violative of Articles 14 and 19 (of course, eschewing the discussion on Article 21 herein for the reasons already given). If Aadhar number is not given, the aforesaid exercise may not be possible. 125. Having said so, it becomes clear from the aforesaid discussion that those who are not PAN holders, while applying for PAN, they are required to gi .....

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the aforesaid proviso is necessary. Those who have already enrolled themselves under Aadhaar scheme would comply with the requirement of sub-section (2) of Section 139AA of the Act. Those who still want to enrol are free to do so. However, those assessees who are not Aadhaar card holders and do not comply with the provision of Section 139(2), their PAN cards be not treated as invalid for the time being. It is only to facilitate other transactions which are mentioned in Rule 114B of the Rules. We .....

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