Full Judgment
P. Shanmugam, J.
The petitioner is a social worker having an income of Rs. 1,500 per month as an honorarium for the services rendered to an organisation. The petitioner is living in Mulanthuruthy which comes within the Urban Agglomeration of Cochin. In his original petition he has sought for a declaration declaring that the provisions contained under the proviso to section 139 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') as illegal and unconstitutional and for a direction not to implement the conditions enumerated under the proviso to section 139.
2. The main contention of the petitioner is that the conditions set out in the proviso, namely, that a person in occupation of an immovable property exceeding a specified floor area by way of ownership, tenancy or otherwise within the city specified, and that the persons subscribing a telephone, have no nexus with the objective of assessment of income-tax. According to him, these conditions imposed against those persons who are owning the property and telephone and leaving others who are having much more income and property, are discriminatory. It is submitted that the geographical classification attempted by the legislation is totally unrelated to the object sought to be achieved. The conditions imposed to file a return is onerous and uncalled for.
3. The learned standing counsel appearing on behalf of the income-tax department submitted that the classification is reasonable and the object of widening the tax collection can be achieved only by this proviso. It is further submitted that filing of return is not onerous since it is now simplified. The proviso was introduced by the Finance Act, 1997 with effect from 1-4-1997. The Memorandum explaining the provisions in the Finance Bill, 1997 is as follows:
'One of the possible ways by which a larger number of persons can be brought under the tax net is to identify potential taxpayers through certain economic indicators. There could be a number of such economic indicators which may be employed for this purpose. It would be a reasonable presumption that any person who satisfies the requirement of ownership/use/expenditure on the following four indicators should be a person having taxable income.'
According to the government, the conditions are indicators for the purpose of having a reasonable presumption of income. Besides, this is only a procedure for assessment and as a citizen of this country, he is obliged to declare a statement of his income. This would only be to help the income-tax department to assess whether a person is liable to pay income-tax. Though in some cases it may be quite possible to happen that in spite of the satisfying conditions set out in the proviso, a person may not have assessable income. By mere filing of the return, a person is not assessed. Probably from the experience gained during these years, the department felt that these are the indicating factors to establish that a person has got a taxable income. Therefore, by Ext. P1 notification, the government has specified 23 areas for the purpose of the proviso. Within the State of Kerala there are three urban agglomeration areas, namely, Kochi, Kozhikode and Thiruvananthapuram. Therefore, occupation of a movable property exceeding the specified floor area within the city as a separate classification can have a justifiable classification on the basis of a uniform criteria of urban agglomeration area. The value of the property in those areas can have some reasonable nexus with the income of the occupant. Secondly, subscription to a telephone, though now has become a necessity, has also a reasonable nexus with the income of an individual. It has to be stated that it is only an indicating factor to have a reasonable presumption that the person who is satisfying any of these two criteria will be having a taxable income. Therefore, these two conditions cannot altogether be discarded as having no nexus with the income. As rightly and fairly conceded by the learned counsel for the petitioner that the other criteria, viz., ownership or lease of a motor vehicle, travelling to any foreign country, holding of credit card and membership of a club where entrance fee charged is twenty-five thousand rupees or more, may have relevance to the income of a person. As on date, I do not find any illegality in making these conditions for the purpose of filing the return. As rightly pointed out by the learned standing counsel, filing of the return is simple and it cannot be termed as onerous. It must be treated as a duty of a citizen to file return even if he does not have an assessable income provided he satisfies these conditions.
For all these reasons, I do not find any illegality in the proviso to section 139 of the Act. Hence, the original petition fails and it is dismissed.