SRI MATHEW THOMAS V. THE UNION OF INDIA

WP/3912/2020

AI Insights

The case involves Sri Mathew Thomas, the petitioner, who sought exemption from linking his PAN with Aadhar number, arguing that enrollment for Aadhar is optional and Section 139AA of the Income Tax Act, which mandates linking, is arbitrary. The respondents, including the Union of India and the Unique Identification Authority of India, defended the mandatory linking citing its purpose in preventing tax evasion and money laundering. The court referenced several Supreme Court judgments which upheld the mandatory linking of PAN with Aadhar for tax purposes, leading to the dismissal of the petition.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 724338 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 16-07-2024
• Assessment Year: misc
• Other Referred Cases: Binoy Viswam v. Union of India, K.S. Puttaswamy (Aadhaar-5J.) v. Union of India, Union of India & others Vs. Shreya Sen & another
• Laws Referred To: Income-tax Act, 1961, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: CHANDRACHUD; SUSHAL TIWARI
• Assessee Lawyers: CHAITANYA
• Keywords: Exemption; Income Tax; Mandatory; PAN; Aadhar; Linking; Unique Identification Number
• Section: 226; 227; 139AA

Judgement Text

" - 1 - NC: 2024:KHC:27552 WP No. 3912 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF JULY, 2024 BEFORE THE HON'BLE MR. JUSTICE K. V. ARAVIND WRIT PETITION No. 3912 OF 2020 (GM-RES) BETWEEN: 1. SRI MATHEW THOMAS, S/O. LATE T.P. JOHN, AGED ABOUT 81 YEARS, RESIDENT OF No.2, 'ARISTOS' SOBHA CITY, THANISANDRA MAIN ROAD, BNEGALURU – 560 064. …PETITIONER (BY SRI CHAITANYA S.G., ADVOCATE) AND: 1. THE UNION OF INDIA, REPRESENTED BY THE SECRETARY MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES, JEEVAN DEEP BUILDING, PARLIAMENT STREET, NEW DELHI – 110 001. 2. THE CHAIRMAN, CENTRAL BOARD OF DIRECT TAXES, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI – 110 002. 3. THE CHAIRMAN, UNIQUE IDENTIFICATION AUTHORITY OF INDIA, BANGLA SAHIB RD, Digitally signed by VALLI MARIMUTHU Location: High Court of Karnataka - 2 - NC: 2024:KHC:27552 WP No. 3912 of 2020 BEHIND KALI MANDIR, GOLE MARKET, NEW DELHI – 110 001. …RESPONDENTS (BY SRI CHANDRACHUD A., ADVOCATE FOR R1 TO R3; SRI SUSHAL TIWARI, ADVOCATE FOR R2) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENTS TO EXEMPT THE PETITIONER, FROM LINKING HIS PAN WITH AADHAR NUMBER, IF ASSIGNED, IF AND WHEN COMPELLED TO ENROLL IN THE SAID SCHEME. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE K. V. ARAVIND ORAL ORDER (PER: HON'BLE MR. JUSTICE K. V. ARAVIND) This petition under article 226 seeking following reliefs; “a. Directing the Respondents to exempt the Petitioner, from linking his PAN with Aadhar number, if assigned, if and when compelled to enroll in the said scheme. b. Grant such other and further relief as this Hon’ble Court deems fit in the interest of justice and equity.” - 3 - NC: 2024:KHC:27552 WP No. 3912 of 2020 2. The petitioner is an Engineering Scientist from Indian Institute of Science. It is stated that the petitioner worked in the Defence department. The petitioner retired from service and is drawing pension. 3. Sri Chaitanya S.G., learned counsel for the petitioner submits that registration for Aadhar is optional. Section 139AA of the Income-tax Act, 1961 (for short 'the Act') mandating linking of PAN with Aadhar number is arbitrary. The petitioner has not enrolled for allotment of Unique Identification Number i.e., Aadhar number. It is contended that when enrolment of Aadhar number is optional, Section 139AA of the Act mandating linking of PAN with Aadhar number is incorrect and arbitrary. 4. Per contra, Sri Chandrachud A., learned counsel appearing for respondent Nos.1 and 3 submits that the validity of Aadhar has been upheld by the Hon’ble Supreme Court. The Aadhar number has been used or recognized as a unique and secured proof of identity for various purposes on compared to other identity proofs. In view of the law laid down by the Hon’ble Supreme Court, upholding the validity of Aadhar, the - 4 - NC: 2024:KHC:27552 WP No. 3912 of 2020 grounds raised in the writ petition do not survive for consideration. 5. Sri Sushal Tiwari learned counsel appearing for respondent No.2 submits that Section 139AA of the Act, mandates linking of PAN with Aadhar number. The purpose of linking is to avoid abuse or possessing multiple PAN numbers. It is submitted that the validity of Section 139AA of the Act is upheld by Hon’ble Supreme Court in the case of Binoy Viswam v. Union of India, (2017) 7 SCC 59. 6. Considered the submissions of learned counsels for the parties and perused the writ papers. 7. The petitioner is having PAN number and assessed to Income Tax. The petitioner is not questioning the competence of the parliament in enacting Section 139AA of the Act. The grounds urged by the petitioner is that enrolment for Aadhar is not mandatory, however optional. By virtue of Section 139AA of the Act, enrolment of Aadhar is made mandatory. Hence, the mandate of Section 139AA of the Act is excessive. The various grounds raised in the petition needs no - 5 - NC: 2024:KHC:27552 WP No. 3912 of 2020 specific attention of this Court to record any finding, in view of the issue being no more Res integra. 8. The Hon’ble Supreme Court in the case of Binoy Viswam (supra), has held as under; \"95. Thus, enrolment under Aadhaar is voluntary. However, it is a moot question as to whether for obtaining benefits as prescribed under Section 7 of the Aadhaar Act, it is mandatory to give Aadhaar number or not is a debatable issue which we are not addressing as this very issue is squarely raised which is the subject-matter of other writ petition filed and pending in this Court. 96. On the one hand, enrolment under Aadhaar card is voluntary, however, for the purposes of the Income Tax Act, Section 139-AA makes it compulsory for the assessees to give Aadhaar number which means insofar as income tax assessees are concerned, they have to necessarily enrol themselves under the Aadhaar Act and obtain Aadhaar number which will be their identification number as that has become the requirement under the Income Tax Act. The contention that since enrolment under the Aadhaar Act is voluntary, it cannot be compulsory under the Income Tax Act, cannot be countenanced. As already mentioned above, purpose for enrolment under the Aadhaar Act is to avail benefits of various welfare schemes, etc. as stipulated in Section 7 of the Aadhaar Act. Purpose behind the Income Tax Act, on the other hand, is entirely different which has already been discussed in detail above. For achieving the said purpose viz. to curb black money, money laundering and tax evasion, etc. if Parliament chooses to make the provision mandatory under the Income Tax Act, the competence of Parliament cannot be questioned on the ground that it is impermissible only because under the Aadhaar Act, the provision is directory in nature. It is the prerogative of Parliament to make a particular provision directory in one statute and - 6 - NC: 2024:KHC:27552 WP No. 3912 of 2020 mandatory/compulsory in other. That by itself cannot be a ground to question the competence of the legislature. After all, the Aadhaar Act is not a mother Act. Two laws i.e. the Aadhaar Act, on the one hand, and law in the form of Section 139-AA of the Income Tax Act, on the other hand, are two different standalone provisions/laws and validity of one cannot be examined in the light of provisions of other Acts. 98. …..we are not impressed by the contention of the petitioners that the two enactments are contradictory with each other. A harmonious reading of the two enactments would clearly suggest that whereas enrolment of Aadhaar is voluntary when it comes to taking benefits of various welfare schemes even if it is presumed that requirement of Section 7 of the Aadhaar Act that it is necessary to provide Aadhaar number to avail the benefits of schemes and services, it is up to a person to avail those benefits or not. On the other hand, purpose behind enacting Section 139-AA of the Act is to check a menace of black money as well as money laundering and also to widen the income tax net so as to cover those persons who are evading the payment of tax. 132. Therefore, it cannot be denied that there has to be some provision stating the consequences for not complying with the requirements of Section 139-AA 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 Aadhaar number is not given, the aforesaid exercise may not be possible. 133. 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 give Aadhaar number. This is the stipulation of sub- section (1) of Section 139-AA, which we have already upheld. At the same time, as far as existing PAN holders are concerned, since the impugned provisions are yet to be considered on the touchstone of Article 21 of the Constitution, including on the debate around right to privacy and human dignity, etc. as - 7 - NC: 2024:KHC:27552 WP No. 3912 of 2020 limbs of Article 21, we are of the opinion that till the aforesaid aspect of Article 21 is decided by the Constitution Bench a partial stay of 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 139-AA 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-AA(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 114-B of the 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 the requirement of sub-section (2) of Section 139-AA of the Act. A person who is holder 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 the Constitution Bench authoritatively determines the argument of Article 21 of the Constitution. Since we are adopting this course of action, in the interregnum, it would be permissible for Parliament to consider as to whether there is a need to tone down the effect of the said proviso by limiting the consequences. 136. Subject to the aforesaid, these writ petitions are disposed of in the following manner: 136.1. We hold that Parliament was fully competent to enact Section 139-AA of the Act and its authority to make this law was not diluted by the orders of this Court. 136.2. We do not find any conflict between the provisions of the Aadhaar Act and Section 139-AA of the Income Tax Act inasmuch as when interpreted harmoniously, they operate in distinct fields. 136.3. Section 139-AA of the Act is not discriminatory nor it offends equality clause enshrined in Article 14 of the Constitution. 136.4. Section 139-AA is also not violative of Article 19(1)(g) of the Constitution insofar as it mandates - 8 - NC: 2024:KHC:27552 WP No. 3912 of 2020 giving of Aadhaar enrolment number for applying for PAN cards, in the income tax returns or notified Aadhaar enrolment number to the designated authorities. Further, the proviso to sub-section (2) thereof has to be read down to mean that it would operate only prospectively. 136.5. The validity of the provision upheld in the aforesaid manner is subject to passing the muster of Article 21 of the Constitution, which is the issue before the Constitution Bench in Writ Petition (Civil) No. 494 of 2012 and other connected matters. Till then, there shall remain a partial stay on the operation of the proviso to sub-section (2) of Section 139-AA of the Act, as described above. No costs.\" 9. The Hon’ble Supreme Court in the case of K.S. Puttaswamy (Aadhaar-5J.) v. Union of India, (2019) 1 SCC 1 has held as under; \"486. On independent examination of the matter, the aforesaid exercise undertaken in Binoy Viswam [Binoy Viswam v. Union of India, (2017) 7 SCC 59] is hereby affirmed as we are in agreement therewith. We, thus, hold that the provisions of Section 139-AA of the Income Tax Act, 1961 meet the triple test of right to privacy, contained in K.S. Puttaswamy [K.S. Puttaswamy v. Union of India, (2017) 10 SCC 1] . Summary and Conclusions 508.1. The architecture and structure of the Aadhaar Act reveals that UIDAI is established as a statutory body which is given the task of developing the policy, procedure and system for issuing Aadhaar numbers to individuals and also to perform authentication thereof as per the provisions of the Act. For the purpose of enrolment and assigning Aadhaar numbers, enrolling agencies are recruited by the Authority. All the residents in India are eligible to obtain an Aadhaar number. To enable a resident to get Aadhaar number, he is required to submit demographic as well as biometric information i.e. apart from giving - 9 - NC: 2024:KHC:27552 WP No. 3912 of 2020 information relating to name, date of birth and address, biometric information in the form of photograph, fingerprint, iris scan is also to be provided. Aadhaar number given to a particular person is treated as unique number as it cannot be reassigned to any other individual. 508.7. The Court also noticed that the whole architecture of Aadhaar is devised to give unique identity to the citizens of this country. No doubt, a person can have various documents on the basis of which that individual can establish her identify. It may be in the form of a passport, PAN card, Ration Card and so on. For the purpose of enrolment itself number of documents are prescribed which an individual can produce on the basis of which Aadhaar card can be issued. Thus, such documents, in a way, are also proof of identity. However, there is a fundamental difference between the Aadhaar card as a mean of identity and other documents through which identity can be established. Enrolment for Aadhaar card also requires giving of demographic information as well as biometric information which is in the form of iris and fingerprints. This process eliminates any chance of duplication. It is emphasised that an individual can manipulate the system by having more than one or even number of PAN cards, passports, Ration Cards, etc. When it comes to obtaining Aadhaar card, there is no possibility of obtaining duplicate card. Once the biometric information is stored and on that basis Aadhaar card is issued, it remains in the system with the Authority. Wherever there would be a second attempt for enrolling for Aadhaar and for this purpose same person gives his biometric information, it would immediately get matched with the same biometric information already in the system and the second request would stand rejected. It is for this reason the Aadhaar card is known as Unique Identification (UID). Such an identity is unparalleled.]\" 10. Further the Hon’ble Supreme Court in the case of Union of India & others Vs. Shreya Sen & another, - 10 - NC: 2024:KHC:27552 WP No. 3912 of 2020 (2020) 20 SCC 441 held that linkage of PAN with Aadhar number is mandatory. 11. In view of the law laid down by the Hon’ble Supreme Court in the above referred judgments, the linking of PAN with Aadhar is mandatory, the petitioner cannot claim exemption from linking his PAN with Aadhar number. 12. The writ petition is meritless, accordingly dismissed. Sd/- (K. V. ARAVIND) JUDGE DDU List No.: 1 Sl No.: 30 "