2020 (1) TMI 696 - HC - Income Tax

Interim Relief Granted: PAN not declared inoperative pending Money Bill judgment

The court granted interim relief to the petitioner by directing that their PAN would not be declared inoperative for non-linking with Aadhaar until the ... Non linking of Aadhaar with PAN - constitutional validity of section 139AA - default in any proceedings only for the reason that the permanent account number is not linked with Aadhaar or Aadhaar number is not quoted - HELD THAT:- Pursuant to interim order passed by this court, the applicant has already filed the return of income for AY 2017-18; however, during the pendency of this petition, the validity of section 139AA of the Act has been upheld by the Supreme Court in Justice K.S. Puttuswamy's case [2018 (9) TMI 1733 - SC ORDER] . The challenge to the constitutional validity of section 139AA of the Act must therefore, necessarily fail. Whether the Aadhaar Act was rightly introduced as a “Money Bill” - As decided in the case of Rojer Mathew v. South Indian Bank Ltd. [2019 (11) TMI 716 - SUPREME COURT] has referred the issue for consideration by a larger Bench. The validity of the Aadhaar Act therefore, has not attained finality. In the event, the larger Bench holds that the Aadhaar Act could not have been introduced as a Money Bill, section 139AA of the Act would be rendered redundant. Therefore, if the applicant is directed to abide by the provisions of section 139AA of the Act, in the event the challenge to the Aadhaar Act being introduced as a Money Bill were to succeed, it would not be possible to turn the clock back as the applicant would be required to provide all the necessary information for obtaining an Aadhaar card and the claim of privacy of the applicant would be lost for all times to come. In the opinion of this court, with a view to balance the equities, the applicant needs to be protected by directing that his PAN shall not be declared inoperative and the applicant may not be subjected to the proviso to sub-section (2) of section 139AA of the Act till the judgment of the Supreme Court in Rojer Mathew v. South Indian Bank Ltd. is delivered and available. In the opinion of this court, grant of such interim relief in favour of the applicant can in no manner have wide repercussions as is sought to be contended on behalf of the revenue. The application succeeds and is, accordingly, allowed to the following extent: It is ordered that PAN of the applicant shall not be declared inoperative and the applicant would not be in default in any proceedings only for the reason that the permanent account number is not linked with Aadhaar or Aadhaar number is not quoted and the applicant shall not be subjected to the proviso to sub-section (2) of section 139AA till the judgment of the Supreme Court in the Rojer Mathew v. South Indian Bank Ltd. and others is delivered and available. Rule is made absolute accordingly to the aforesaid extent. Issues involved:Challenge to linking PAN with Aadhaar, validity of section 139AA of the Income Tax Act, 1961, balance of convenience, impact of Supreme Court judgment in Justice K.S. Puttaswamy's case, reference to Larger Bench regarding Aadhaar Act as a Money Bill, protection of privacy rights, equities in granting interim relief.Detailed Analysis:Issue 1: Challenge to linking PAN with AadhaarThe petitioner sought a declaration that non-linking of PAN with Aadhaar should not lead to default in any proceedings. The petitioner argued that the balance of convenience favored him as the adverse consequences of linking would cause irreparable injury, while the respondent would not face any adverse consequences. The petitioner emphasized the need to protect against financial and criminal consequences and urged that his PAN should remain operative until the issue is resolved.Issue 2: Validity of section 139AA of the Income Tax ActThe respondent contended that the Supreme Court's decision in Justice K.S. Puttaswamy's case upheld the validity of section 139AA, making it binding. The respondent argued that staying the operation of the provision would be against the law of the land and could have wide repercussions. It was emphasized that the State is entitled to recover dues based on existing statutory provisions.Issue 3: Reference to Larger Bench regarding Aadhaar Act as a Money BillThe court noted that the Supreme Court had referred the issue of the Aadhaar Act being introduced as a Money Bill to a larger Bench, indicating that the validity of the Act was not finalized. The court highlighted the potential impact of this reference on the operation of section 139AA. To balance the equities, the court decided to protect the petitioner by directing that his PAN should not be declared inoperative until the judgment on the Money Bill issue is delivered.Issue 4: Protection of Privacy RightsThe court considered the irreversible nature of providing biometric and other information for Aadhaar enrollment, emphasizing the importance of protecting the petitioner's privacy rights. It was highlighted that if the Aadhaar Act is found to have been wrongly introduced as a Money Bill, the petitioner's privacy rights would be compromised irreversibly.Issue 5: Equities in granting interim reliefIn granting interim relief to the petitioner, the court balanced the equities by considering the potential impact on the petitioner's privacy rights and the need for protection until the larger Bench decides on the Money Bill issue. The court concluded that granting such relief would not have the wide repercussions as feared by the revenue.Conclusion:The court allowed the application to the extent that the petitioner's PAN would not be declared inoperative, and he would not be in default for non-linking with Aadhaar until the judgment on the Money Bill issue is delivered. The court's decision aimed to protect the petitioner's rights and balance the equities in the ongoing legal proceedings.