H.A.K. Rao vs Union of India

Chandrakantaraj Urs, J.—In this petition, the petitioner who is a chartered accountant has challenged the constitutional vires of section 44AA of the Income Tax Act, 1961, inter alia, on the ground that, between the professions not enumerated in sub-section (1) of section 44AA and other professions, a discrimination is made inasmuch as the professions enumerated are required to maintain books of account to be inspected by the Income Tax Officer to ascertain their income while other professions not so enumerated in sub-section (1) but falling under sub-section (2) if the income exceeds the amount mentioned in the said sub-section are required to maintain the accounts. Prima facie, we do not find any such discrimination because the enumerated professions under sub-section (1) to section 44AA fall definitely into a category of professions by and large regulated by statutes which in turn case more obligations on those persons to maintain accounts such as lawyers, chartered accounts, doctors, etc. Therefore, the petitioner cannot press into service article 14, when, under article 14, classification of persons to achieve the purpose of a legislation is permissible.

The object of the Income Tax Act is to see that tax is levied on persons who have income from the source of profession and organised professions or professions which are in categories like interior decorators who charge considerable fees for the services rendered, perhaps are not regulated by any enactment to subserve the object of bringing to tax their income.

What falls outside the enumerated class, practicality is the guiding force to prescribe a monetary limit which will compel them to maintain accounts. It would be futile to call upon an ordinary pan seller or a street vendor or a road-side hawker or cabin shop owner or vegetable vendor and persons like those who also carry on profession to maintain books of account. Viewed in that fashion, we are unable to see any discrimination or need to attract the equality assured under article 14 of the Constitution. It cannot be said that the professions which we have mentioned such as street hawkers, ordinary pan sellers, etc., belong to the same category or class of persons as advocates, doctors and engineers.

Therefore, there is no vice of discrimination if they are treated separately and distinctly. Within that profession, a further classification is made, viz., those who earn more than Rs. 25,000 and those who earn less then Rs. 25,000. Those who earn more then Rs. 25,000 are required to maintain books of account. Therefore, we do not see any unreasonableness in such classification.

However, it is rightly pointed out by Mr. S. P. Bhat, learned counsel for the petitioner, that the vice of discrimination, if at all it was there, has been eliminated since by inserting rule 6F in the Income Tax Rules by which such a financial limit has been imposed on the professions enumerated in sub-section (1) of section 44AA of the Act as well.

Therefore, there is no merit in this petition. It is rejected.