In High Court of Judicature at Madras Dated : 06.11.2017 Coram Honourable Mr.Justice T.S.SIVAGNANAM W.P.No.28181 of 2017 & WMP.No.30311 of 2017 Mr.Thiagarajan Kumararaja ...Petitioner Vs 1.Union of India, rep.by Secretary, Ministry of Finance, North Block, New Delhi-110001. 2.The Central Board of Direct Taxes, rep. by its Chairperson, Ministry of Finance, 9th Floor, Lok Nayak Bhavan, New Delhi-110001. 3.The Income Tax Officer, Non Corporate Ward 1(1), Chennai. ...Respondents PETITION under Article 226 of Constitution of India praying for issuance Writ of Mandamus directing third respondent to grant petitioner permission to file his income tax return for assessment year 2017-18 either manually or through appropriate e-filing facility without insisting petitioner to produce his aadhar number and/or his enrolment ID as defined under Section 139AA of Income Tax Act, 1961 and further forbear third respondent or any other authority acting under or on behalf of third respondent from in any manner taking any coercive steps against petitioner under Income Tax Act, 1961 in lieu of any obligation flowing from section 139AA of Income Tax Act,1961 for assessment http://www.judis.nic.in 2 year 2017-18. For Petitioner : Mr.V.Prashankiran For Respondent-1 : Mr.Rabu Manohar, SPCCG For Respondents 2 & 3 : Mr.G.Rajagopalan, ASG assisted by Mrs.Hema Muralikrishnan ORDER Heard V.Prashanthkiran, learned counsel for petitioner, Mr.Rabu Manohar, learned Senior Panel Counsel for Central Government and Mr.G.Rajagopalan, learned Additional Solicitor General assisted by Mrs.Hema Muralikrishnan, learned Standing Counsel appearing for Income Tax Department. This Court also heard Mr.Suhrith Parthasarathy, learned counsel, who intervened in matter, as he had appeared in another writ petition in W.P.No.27826 of 2017 wherein identical prayer is sought for and interim order has been granted on 31.10.2017. 2. In fact, petitioner, in typed set of papers filed in this writ petition, has enclosed interim order granted by this Court on 31.10.2017, which is quoted herein below : "Heard Mr.Suhrith Parthasarathy, learned counsel for petitioner. 2. petitioner before this Court is practicing advocate and she has filed this writ petition praying for direction to third respondent to allow her to file income tax returns for assessment year 2017-18 either manually or through e-filing facility without insisting for production of aadhar number/card or http://www.judis.nic.in 3 enrollment identity as defined under Section 139AA of Income Tax Act, 1961. 3. petitioner's case rests upon decision of Hon'ble Supreme Court in case of Binoy Viswam Vs. Union of India [reported in (2017) 396 ITR 66] wherein Hon'ble Supreme Court pointed out that since impugned provision therein (Section 139AA of said Act) is yet to be considered on touchstone of Article 21 of Constitution including on debate around right to privacy and human dignity, etc. as limbs of Article 21, till aforesaid aspect of Article 21 is decided by Constitution Bench, partial stay of aforesaid proviso is necessary. In respect of those assessees, who do not have aadhar card and who do not comply with provisions of Section 139AA(2), it was held that their PAN cards cannot be treated as invalid for time being. 4. matter has now been referred to Constitution Bench, which is to hear matter sometime by end of November 2017. It is seen that in identical circumstances, one of assessees by name Prasanth Sugathan moved High Court of Kerala by filing W.P.(Civil).No.26033 of 2017 (D) wherein similar relief was sought and High Court of Kerala, by order dated 04.8.2017, issued direction to third respondent therein to allow petitioner therein to file income tax returns manually without http://www.judis.nic.in 4 insisting upon aadhar number or card or enrollment number pending disposal of writ petition. I am inclined to grant similar relief, since today being last date for filing income tax returns. If income tax returns are filed belatedly and if, ultimately, matter is decided by Constitution Bench of Hon'ble Supreme Court against petitioner, then she may be liable for payment of interest for belated payment of tax. balance of convenience is in favour of petitioner for grant of appropriate interim order. 5. Accordingly, there will be interim direction to third respondent to permit petitioner to file her income tax returns for assessment year 2017-18 either manually or through appropriate e-filing facility without insisting for aadhar number and/or enrollment ID. Notice to respondents is accepted by Mr.Navin Durai Babu, learned Standing Counsel for Revenue. He seeks time to get instructions and file counter. List on 18.12.2017." 3. In this writ petition, petitioner seeks direction to third respondent to grant permission to him to file his income tax returns for assessment year 2017-18 either manually or through appropriate e-filing facility without insisting petitioner to produce his aadhaar card and/or enrollment ID as defined under Section 139AA of Income Tax Act, 1961 (hereinafter called Act) and not to initiate coercive action against http://www.judis.nic.in 5 petitioner. 4. petitioner's case rests upon decision of Hon'ble Supreme Court in case of Binoy Viswam Vs. Union of India [reported in (2017) 396 ITR 66]. It is submission of petitioner that Hon'ble Supreme Court granted partial stay of Proviso under Sub-Section (2) of Section 139AA of Act and that assessees like petitioner, who have not enrolled under Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act 2016 (hereinafter called Aadhaar Act) and who do not comply with provisions of Section 139AA(2) of Act, cannot have their Permanent Account Number (PAN) treated as invalid until Supreme Court hears and determines larger challenge, in which, validity of Aadhaar Act has been assailed. 5. It is his further submission that on reading of judgment of Hon'ble Supreme Court in case of Binoy Viswam, it is clear that respondents cannot insist that persons like petitioner, who have not enrolled under Aadhaar Act and who do not wish to enroll themselves, must quote their aadhaar number or their enrollment ID in order to file their income tax returns in accordance with Section 143(1) of Act. It is also submitted that without disclosing aadhaar number, petitioner would be unable to file his income tax returns and that therefore, petitioner seeks direction to third respondent to permit him to file his returns without production of aadhaar number. 6. learned Additional Solicitor General submits that contention http://www.judis.nic.in 6 raised by petitioner is clear misreading of judgment of Hon'ble Supreme Court in case of Binoy Viswam and that Hon'ble Supreme Court has not granted stay of Section 139AA(2) of Act, but its validity has been upheld and limited stay, which was granted by Hon'ble Supreme Court, was only to facilitate other transactions, which are mentioned in Rule 114B of Income Tax Rules, 1962 (hereinafter called Rules). Therefore, Hon'ble Supreme Court having upheld provisions of Section 139AA of Act, partial stay granted was only restricted to transactions mentioned in Rule 114B of Rules and hence, question of permitting petitioner to file manual returns without furnishing aadhaar number is not sustainable and that was not judgment of Hon'ble Supreme Court. 7. I have heard learned counsel on either side and carefully perused materials available on record. 8. Hon'ble Supreme Court, in case of Binoy Viswam, pointed out that on one hand, enrollment under aadhaar card is voluntary, however, for purposes of 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 Aadhaar Act and obtain aadhaar number, which will be their identification number, as that has become requirement under Act. 9. It has been further held by Hon'ble Supreme Court in Binoy http://www.judis.nic.in 7 Viswam that contention that since enrollment under Aadhaar Act is voluntary and cannot be made compulsory under Act, was rejected. It has also been held that purpose behind Act namely Income Tax Act, 1961 is entirely different and purpose being to curb black money, money laundering and tax evasion, etc. It has been further held that for achieving such objects, if Parliament chooses to make provision mandatory under Act, competence of Parliament cannot be questioned on ground that it is impermissible only because under Aadhaar Act, provision is directory in nature. Hon'ble Supreme Court also held that it is prerogative of Parliament to make particular provision directory in one Statute and mandatory/compulsory in other and that by itself cannot be ground to question competence of Legislature. 10. In paragraphs 113 and 114 of judgment, Hon'ble Supreme Court, in order to consider submissions advanced, bifurcated Section 139AA of Act into two parts and observed as follows : "113. In order to consider aforesaid submissions, we may bifurcate Section 139AA in two parts, as follows: (i) That portion of provision which requires quoting of Aadhaar number (Sub- Section(1)) and requirement of intimating Aadhaar number to prescribed authorities by these who are PAN holders (Sub-Section (2)). (ii) Consequences of failure to intimate http://www.judis.nic.in 8 Aadhaar number to prescribed authority by specified date. 114. Insofar as first limb of Section 139AA of Act is concerned, we have already held that it was within competence of Parliament to make provision of this nature and further that it is not offensive of Article 14 of Constitution. This requirement, per se, does not find foul with Article 19(1)(g) of Constitution either, inasmuch as, quoting Aadhaar number for purposes mentioned in Sub-Section (1) or intimating Aadhaar number to prescribed authority as per requirement of Sub-Section (2) does not, by itself, impinge upon right to carry on profession or trade, etc. Therefore, it is not violative of Article 19(1)(g) of Constitution either. In fact, that is not even argument of petitioners. Entire emphasis of petitioners submissions, while addressing arguments predicated on Article 19(1)(g) of Constitution, is on consequences that ensue in terms of proviso to Sub-Section (2) inasmuch as it is argued, as recorded above, that consequences provided will have effect of paralysing right to carry on business/ profession. Therefore, thrust is on second part of Section 139AA of Act, which we proceed to deal with, now." 11. After rendering above finding, it was observed that though PAN is issued under provisions of Section 139A of Act, its function is http://www.judis.nic.in 9 not limited to giving this number in income tax returns or for other acts to be performed under Act as mentioned in Sub-Sections (5), (5A), (5B), 5(C), 5(D) and (6) of Section 139A. It was further observed that Rule 114B of Rules mandates quoting of this PAN in various other documents pertaining to different kinds of transactions listed therein. It was also observed that for doing many activities of day to day nature, including in course of business, PAN is to be given and in absence of PAN, it will be impossible to undertake any of activities, though its requirement is aimed at curbing tax evasion. It was further observed that if PAN of person is withdrawn or is nullified, it definitely amounts to placing restrictions on right to do business. 12. Then, Hon'ble Supreme Court proceeded to frame question as to whether these restrictions are reasonable and meet requirement of Clause (6) of Article 19. After referring to decision in case of Modern Dental College and Research Centre Vs. State of Madhya Pradesh [reported in 2016 (7) SCC 353], proceeded to discuss as to whether restrictions, which would result in terms of Proviso to Sub-Section (2) of Section 139AA of Act, are reasonable or not. On this question, it would be beneficial to refer to certain paragraphs viz. paragraphs 122, 124 and 125 of decision in case of Binoy Viswam, as under : "122. While considering aforesaid submission of petitioners, one has to keep in mind aforesaid purpose of impugned provision and what it seeks to achieve. http://www.judis.nic.in 10 provision is aimed at seeding Aadhaar with PAN. We have already held, while considering submission based on Article 14 of Constitution, that provision is based on reasonable classification and that has nexus with objective sought to be achieved. One of main objectives is to de-duplicate PAN cards and to bring situation where one person is not having more than one PAN card or person is not able to get PAN cards in assumed/fictitious names. In such scenario, if those persons who violate Section 139AA of Act without any consequence, provision shall be rendered toothless. It is prerogative of Legislature to make penal provisions for violation of any law made by it. In instant case, requirement of giving Aadhaar enrolment number to designated authority or stating this number in income tax returns is directly connected with issue of duplicate/fake PANs. .... "124. Therefore, it cannot be denied that there has to be some provision stating consequences for not complying with requirements of Section 139AA of Act, more particularly when these requirements are found as not violative of Articles 14 and 19 (of course, eschewing discussion on Article 21 herein for reasons already given). If Aadhar number is not given, aforesaid exercise may not be http://www.judis.nic.in 11 possible. 125. Having said so, it becomes clear from aforesaid discussion that those who are not PAN holders, while applying for PAN, they are required to give Aadhaar number. This is stipulation of sub-section (1) of Section 139AA, which we have already upheld. At same time, as far as existing PAN holders are concerned, since impugned provisions are yet to be considered on touchstone of Article 21 of Constitution, including on debate around Right to Privacy and human dignity, etc. as limbs of Article 21, we are of opinion that till aforesaid aspect of Article 21 is decided by Constitution Bench partial stay of aforesaid proviso is necessary. Those who have already enrolled themselves under Aadhaar scheme would comply with requirement of sub-section (2) of Section 139AA of 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 provision of Section 139(2), their PAN cards be not treated as invalid for time being. It is only to facilitate other transactions which are mentioned in Rule 114B of Rules. We are adopting this course of action for more than one reason. We are saying so because of very severe consequences that entail in not adhering to requirement of sub-section (2) of Section 139AA of Act. person who is holder http://www.judis.nic.in 12 of PAN and if his PAN is invalidated, he is bound to suffer immensely in his day to day dealings, which situation should be avoided till Constitution Bench authoritatively determines argument of Article 21 of Constitution. Since we are adopting this course of action, in interregnum, it would be permissible for Parliament to consider as to whether there is need to tone down effect of said proviso by limiting consequences." 13. On reading of above quoted paragraphs in decision in case of Binoy Viswam, it would clearly show that Hon'ble Supreme Court has not stayed Proviso to Sub-Section (2) of Section 139AA of Act and partial stay would be applicable only to facilitate other transactions, which are mentioned in Rule 114B of Rules, which pertains to transactions, in relation to which, PAN is to be quoted in all documents for purpose of Clause (C) of Sub-Section (5) of Section 139A of Act. Therefore, to state that partial stay granted by Hon'ble Supreme Court would enure to benefit of petitioner even for filing income tax returns is plea, which is not sustainable and is liable to be rejected. 14. For all above reasons, this Court finds no grounds to entertain writ petition and grant relief sought for. 15. Accordingly, writ petition is dismissed. No costs. Consequently, above WMP is also dismissed. 06.11.2017 http://www.judis.nic.in 13 Speaking Order Index : Yes Internet : Yes To 1.The Secretary to Union of India, Ministry of Finance, North Block, New Delhi-110001. 2.The Chairperson, Central Board of Direct Taxes, Ministry of Finance, 9th Floor, Lok Nayak Bhavan, New Delhi-110001. 3.The Income Tax Officer, Non Corporate Ward 1(1), Chennai. RS http://www.judis.nic.in 14 T.S.SIVAGNANAM,J RS WP.No.28181 of 2017& WMP.No.30311 of 2017 06.11.2017 http://www.judis.nic.in Thiagarajan Kumararaja v. Union of India / Central Board of Direct Taxes / Income-tax Officer, Non Corporate Ward 1(1), Chennai