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S. 206AA runs counter to s. 139A and is discriminatory. Though the Legislature’s intention is to bring maximum persons under the income-tax net, it may not insist that even persons whose income is below the taxable limit have to compulsorily obtain a PAN. If any tax avoidance is detected, that can be taken care of by penal provisions.
A. Kowsalaya Bai v UOI 5th June 2012
Writ Petitions 12780 – 12782 / 2010 (T) Karnatka High Court
• Accordingly, s.206AA is read down as being inapplicable to persons whose income is less than the taxable limit. Banks & financial institutions should not insist upon PAN from such small investors. It continues to apply to persons whose income is above the taxable limit
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