Aadhaar Mandatory for filing IT Returns: Madras HC

Mr. Thiagarajan Kumararaja Vs Union of India (Madras High Court)

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 Sub-Sections (5), (5A), (5B), 5(C), 5(D) and (6) of Section 139A. It was further observed that Rule 114B of the 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 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 It was further observed that if the PAN of a person is withdrawn or is nullified, it definitely amounts to placing restrictions on the right to do business.

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], proceeded to discuss as to whether the restrictions, which would result in terms of the Proviso to Sub-Section (2) of Section 139AA of the Act, are reasonable or not. On this question, it would be beneficial to refer to certain paragraphs viz. paragraphs 122, 124 and 125 of the decision in the case of Binoy Viswam, as under :

“122. While considering the aforesaid submission of the petitioners, one has to keep in mind the aforesaid purpose of the impugned provision and what it seeks to achieve. The 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 persons who violate Section 139AA of the Act without any consequence, the provision shall be rendered toothless. It is the prerogative of the Legislature to make penal provisions for violation of any law made by it. In the instant case, requirement of giving Aadhaar enrolment number to the designated authority or stating this number in the income tax returns is directly connected with the issue of duplicate/fake PANs.
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