Monday 23 May 2022
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Why SC found linking PAN with Aadhaar all right

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New Delhi: The Supreme Court of India in its landmark judgment has upheld Section139AA of the Income Act, 1961, as constitutionally valid. It required quoting of the Aadhaar number in applying for a Permanent Account Number (PAN) as well as for filing of income returns.

The apex court held that

was fully competent to enact Section 139AA of the Act and its authority to make this law was not diluted by the orders of this Court.”

Therefore, no violation of the earlier Supreme Court orders was found in the enactment of the provision.

The court has also held that Section 139AA of the Act is not discriminatory nor it offends equality clause enshrined in Article 14 of the Constitution.

Section 139AA is not violative, the court said, of Article 19(1)(g) of the Constitution insofar as it mandates giving of Aadhaar number for applying PAN and in the income returns and linking PAN with Aadhaar number.

Section 139AA(1) of the Income Act, 1961, as introduced by the Finance Act, 2017, provides for mandatory quoting of Aadhaar/Enrolment ID of the Aadhaar application form, for filing of return of income and for making an application for allotment of PAN with effect from 1 July 2017.

Section 139AA(2) of the Income Act, 1961, provides that every person who has been allotted PAN as on 1 July and who is eligible to obtain Aadhaar, shall intimate his Aadhaar on or before a date to be notified by the government. The proviso to section 139AA (2) provides that in case of non-intimation of Aadhaar, the PAN allotted to the person shall be deemed to be invalid from a date to be notified by the Central government.

The court has upheld Section 139AA(1), which mandatorily requires quoting of Aadhaar for new PAN applications as well as for filing of returns.

The court has also upheld Section 139AA(2) which requires that the Aadhaar number must be intimated to the prescribed authority for the purpose of linking with PAN.

It is only the proviso to Section 139AA(2) where the Supreme Court has granted a partial stay for the time being pending resolution of the other cases before the larger bench of the Supreme Court. The Supreme Court has unequivocally stated as follows:

The verdict reads in its 125th point,

“Having said so, it becomes clear from the aforesaid discussion that those who are not PAN holders, while applying for PAN, they are required to give Aadhaar number. This is the stipulation of sub-section (1) of Section 139AA, which we have already upheld. At the same time, as far as existing PAN holders are concerned, since the impugned provisions are yet to be considered on the touchstone of Article 21 of the Constitution, including on the debate around Right to and human dignity, etc. as limbs of Article 21, we are of the opinion that till the aforesaid aspect of Article 21 is decided by the Constitution Bench a partial stay of the aforesaid proviso is necessary. Those who have already enrolled themselves under Aadhaar scheme would comply with the requirement of sub-section (2) of Section 139AA of the Act. Those who still want to enrol are free to do so. However, those assessees who are not Aadhaar card holders and do not comply with the provision of Section 139(2), their PAN cards be not treated as invalid for the time being. It is only to facilitate other transactions which are mentioned in Rule 114B of the Rules. We are adopting this course of action for more than one reason. We are saying so because of very severe consequences that entail in not adhering to the requirement of sub-section (2) of Section 139AA of the Act. A person who is [a] holder of PAN and if his PAN is invalidated, he is bound to suffer immensely in his day to day dealings, which situation should be avoided till the Constitution Bench authoritatively determines the argument of Article 21 of the Constitution. Since we are adopting this course of action, in the interregnum, it would be permissible for the to consider as to whether there is a need to tone down the effect of the said proviso by limiting the consequences.”

The judgment implies that, this 1 July onwards, every person eligible to obtain Aadhaar must quote their Aadhaar number or their Aadhaar Enrolment ID number for the filing of Income Returns as well as for applications for PAN. It means that everyone who has been allotted permanent account number as on 1 July and who has Aadhaar number or is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to income tax authorities for the purpose of linking PAN with Aadhaar.

However, according to the verdict, for non-compliance of the above point No.(ii), only a partial relief by the court has been given to those who do not have Aadhaar and who do not wish to obtain Aadhaar for the time being, that their PAN will not be cancelled so that other consequences under the Income Act for failing to quote PAN may not arise.

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