By TIOL News Service

CHENNAI, NOV 13, 2017: THE issue before the Bench is - Whether, for the purpose of linking PAN with Aadhaar, it is Parliament's prerogative to make a particular provision directory in one statute and mandatory in others. YES is the answer.

Facts of the case

The Assessee, a practicing advocate, was willing to file his returns for the AY 2017-18 however, the Income tax department refused to accept the same as he was not enrolled under the Aadhaar Act. The Department asked the Assessee to produce his Aadhar number and/or his Enrolment ID as defined u/s 139AA. The Assessee preferred Writ for permission to file his return for the relevant AY either manually or through appropriate e-filing facility without insisting on linking of Aadhaar card and/or enrollment ID and not to initiate coercive action against him.

In Writ, the High Court held that,

++ the Apex Court, in the case of Binoy Viswam, pointed out that on the one hand, the enrollment 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;

++ it has been further held by the Apex Court in Binoy Viswam case that the contention that since enrollment under the Aadhaar Act is voluntary and cannot be made compulsory under the Act, was rejected. It has also been held that the purpose behind the Act namely the Income Tax Act, 1961 is entirely different and the purpose is to curb black money, money laundering and tax evasion. For achieving such objects, if the Parliament chooses to make the provision mandatory under the Act, and the competence of the Parliament cannot be questioned on the ground that it is impermissible only because under the Aadhaar Act, the provision is directory in nature. The 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;

++ 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 returns or for other acts to be performed under the Act as mentioned in Sub-Sections (5), (5A), (5B), 5(C), 5(D) and (6) of Section 139A. Rule 114B mandates quoting of the PAN in various other documents pertaining to different kinds of transactions listed therein;

++ for doing many activities of day to day nature, including in the course of business, the PAN is to be given and 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;

++ it would clearly show that the Supreme Court has not stayed the Proviso to Sub-Section (2) of Section 139AA and the partial stay would be applicable only to facilitate the other transactions, which are mentioned in Rule 114B of the Rules, which pertains to transactions, in relation to which, PAN is to be quoted in all documents for the purpose of Clause (C) of Sub-Section (5) of Section 139A of the Act. Therefore, to state that the partial stay granted by the Supreme Court would enure to the benefit of the Assessee even for filing returns is a plea, which is not sustainable and is liable to be rejected. For all such reasons, this Court finds no grounds to entertain the writ petition and grant the relief sought for. Accordingly, the writ petition is dismissed. No costs. Consequently, the above WMP is also dismissed.

(See 2017-TIOL-2384-HC-MAD-IT)