Section 139A

Section 139A — the law in short

What the courts have decided on section 139A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Binoy Viswam v Union of India Supreme CourtCuts both ways
  Is the Aadhaar-PAN requirement in s.139AA valid, and can my existing PAN be cancelled under it?
  Valid, with one limited relief. Section 139AA was upheld against Article 14, the classification being rationally connected to eliminating duplicate and fake PANs, and against Article 19(1)(g) as a reasonable restriction saved by Article 19(6); the Article 21 privacy challenge was expressly left to the Constitution Bench. The only relief was that the consequence in s.139AA(2) of treating a PAN as invalid could not operate retrospectively so as to unsettle completed transactions of existing PAN holders who had not enrolled.
• CIT (TDS) v Superintendent of Police High CourtHelps taxpayer
  CPC has raised a s.272B penalty of ten thousand rupees for each of 196 deductees whose PANs were invalid in my TDS statement. The deductees gave me those numbers. Is that reasonable cause?
  Yes, on these facts. The Punjab and Haryana High Court dismissed the Revenue's appeal against the deletion of a Rs 19,60,000 penalty levied at Rs 10,000 per default for 196 invalid PANs in a quarterly TDS statement. The Court held that whether sufficient cause had been shown within s.273B was a question of fact, on which the CIT(A) and the Tribunal had concurrently found in the assessee's favour after examining the explanation, and that no substance remained in the Revenue's argument.
• A. Kowsalya Bai v Union of India High CourtHelps taxpayerNo later treatment found
  My income is below the taxable limit and I filed Form 15G, but the finance company says it cannot act on it without a PAN. Can section 206AA be applied to me?
  No. The Karnataka High Court read section 206AA down as inapplicable to persons whose income is below the taxable limit. Section 139A obliges only certain persons to obtain a permanent account number, and a person with income below the exemption limit is not among them. Section 206AA, which invalidates a section 197A declaration filed without a PAN, runs contrary to that earlier provision and, so applied, is discriminatory. The Court held that banking and financial institutions must not insist on a PAN from such small investors, adding that any evasion or concealment can be dealt with under the penal provisions. Section 206AA continues to apply to those above the taxable limit.
• Nagarjuna Fertilizers and Chemicals Ltd v ADIT (International Taxation)-II, Hyderabad ITATHelps taxpayer
  My non-resident payees had no PAN and the treaty rate is ten per cent. The officer says s.206AA has a non obstante clause and overrides everything, so twenty per cent it is. Is there a Special Bench on this?
  There is, and it is against the department. The Hyderabad Special Bench held that s.206AA will not have an overriding effect over all other provisions of the Act, and that treaty provisions, to the extent more beneficial, override s.206AA by virtue of s.90(2). It answered the question referred to it in the negative and in favour of the assessee, and held that the deductor could not be required to deduct at the higher of the s.206AA rates on payments to non-residents having taxable income in India despite their failure to furnish PANs.
• Statutory position — section 206AA, sub-section (7) and rule 37BC: the twenty per cent rate, the five per cent provisos, and the non-resident's way out CBDT Circulars & InstructionsCuts both ways
  My non-resident payee has no PAN. Must I deduct at twenty per cent, and is there any prescribed alternative?
  Section 206AA(1) requires a deductee to furnish his permanent account number, failing which tax is deducted at the higher of the rate specified in the relevant provision, the rates in force, or twenty per cent — but two provisos substitute five per cent for twenty where the deduction is under section 194-O or section 194Q. Sub-section (7) disapplies the section altogether to a non-resident not being a company and to a foreign company in respect of interest on long-term bonds under section 194LC and any other payment subject to prescribed conditions, and rule 37BC prescribes those conditions. Under rule 37BC(1) the section does not apply to interest, royalty, fees for technical services, dividend and payments on transfer of any capital asset if the deductee furnishes the four items in sub-rule (2) to the deductor.
• Statutory position — section 139A(5), rule 114B and Form 60: where PAN must be quoted, and the section 272B penalty of ten thousand rupees for each default CBDT Circulars & InstructionsCuts both ways
  A penalty notice under s.272B says ten thousand rupees for each of dozens of defaults. Where is PAN actually required to be quoted, what does a person without one do, and is the penalty really per default?
  Rule 114B lists eighteen transactions in which every person must quote his permanent account number, from opening a bank account and buying a car to a sale or purchase of immovable property exceeding ten lakh rupees and any sale or purchase of goods or services exceeding two lakh rupees per transaction. A person other than a company or firm who has no permanent account number makes a declaration in Form No. 60 instead. Section 272B(1) charges ten thousand rupees for failure to comply with section 139A; sub-sections (2), (2A) and (2B) each charge ten thousand rupees 'for each such default', and no order under any of them may be passed without an opportunity of being heard.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.