2017 (11) TMI 450 - HC - Income Tax

High Court Grants Interim Relief on Aadhar-PAN Linking Issue

The High Court acknowledged the challenge to the validity of section 139AA of the Income Tax Act, 1961, in relation to the right to privacy and Aadhar ... Validity of section 139AA - petitioner does not possess the Aadhar card - filing of return of income with PAN which is neither linked with an Aadhar card nor where the assessee has applied for Aadhar and such application is pending, would be invalid - whether adherence to section 139AA violates Article 21 of the Constitution? - Held that:- On one hand, minus the angle of right to privacy, the Supreme Court in case of Binoy Viswam (2017 (6) TMI 478 - SUPREME COURT OF INDIA ) has upheld the validity of section 139AA of the Act. The question of validity of section 139AA of the Act on the anvil of breach of right to privacy would now have to be tested. The question whether Aadhar card regime breaches such a right is at large before the Supreme Court. In the meantime, the last date for filing return for the petitioner-assessee would be 31.10.2017. If, by that time, no return is filed, the petitioner would expose himself to certain penal liabilities. On the other hand, if the department is directed to accept the petitioner's return without any further obligation on its part, no prejudice would be caused to the respondents. Thus by way of interim directions, the petitioner is allowed to file the return of income for the assessment year 2017-18 before the department in hard copy. The department may accept the same without the petitioner linking his PAN card with Aadhar card or having to make a declaration that he has applied for one. It would not be obligatory for the department to process such return. Issues:Challenge to the validity of section 139AA of the Income Tax Act, 1961 on the grounds of violation of Article 21 of the Constitution and the right to privacy. The petitioner's request for a direction to accept the return of income without linking PAN with Aadhar card.Analysis:Issue 1: Validity of Section 139AA of the Income Tax Act, 1961The petitioner challenged the validity of section 139AA of the Income Tax Act, 1961, arguing that it violates Article 21 of the Constitution. The petitioner contended that filing income tax returns with a PAN not linked to an Aadhar card or where the application for Aadhar is pending would be deemed invalid under the said section. The petitioner highlighted the department's online system rejecting such returns. The High Court acknowledged the challenge and noted that the Supreme Court had previously upheld the validity of section 139AA in the case of Binoy Viswam vs Union of India. However, the issue of the right to privacy as a fundamental right was pending before a larger Bench of the Supreme Court. The High Court recognized the conflicting positions and the evolving legal landscape regarding Aadhar cards and the right to privacy.Issue 2: Right to Privacy and Aadhar CardThe High Court considered the evolving legal position on the right to privacy, noting the Supreme Court's ruling in the case of Justice K.S. Puttaswamy vs. Union of India, establishing the right to privacy as a fundamental right under Article 21 of the Constitution. The Court highlighted the ongoing debate on the validity of Aadhar cards and the government's directives making it mandatory for various activities and benefits. The conflicting judgments and the pending issues before the Supreme Court regarding the right to privacy and Aadhar cards added complexity to the case.Issue 3: Interim Relief and DirectionsGiven the impending deadline for filing income tax returns, the High Court provided interim relief to the petitioner. The Court allowed the petitioner to file the return for the assessment year 2017-18 in hard copy without linking the PAN with the Aadhar card or declaring an application for one. The Court clarified that the department was not obligated to process such returns, and the assessment would be stayed. The interim arrangement aimed to prevent the petitioner from incurring penal liabilities due to non-filing of returns while awaiting further or final orders in the petition. The Court emphasized that the mere filing of the return did not establish any equity in favor of the petitioner, subject to subsequent court orders.In conclusion, the High Court's judgment addressed the challenges to the validity of section 139AA of the Income Tax Act, 1961, in light of the evolving legal landscape concerning the right to privacy and Aadhar cards. The interim relief provided a temporary solution to the petitioner's concerns regarding the filing of income tax returns pending final adjudication on the issues involved.