1. The Hon’ble Supreme Court of India in
its Landmark Judgement has upheld Section139AA of the Income Tax Act,1961 as
constitutionally valid which required quoting of the Aadhaar number in
applying for PAN as well as for filing of income tax returns.
2. The Hon’ble Court
also held that the “Parliament 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 were found in enacting the provision.
3. The Hon’ble 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.
4. Section
139AA is also not violative of Article 19(1)(g) of the Constitution in so far
as it mandates giving of Aadhaar number for applying PAN and in the income tax
returns and linking PAN with Aadhaar number.
5. Section 139AA(1) of the Income Tax Act,1961
as introduced by the finance Act, 2017 provides for mandatory quoting of
Aadhaar/Enrolment ID of Aadhaar application form, for filing of return of
income and for making an application for allotment of PAN with effect from 1st
July, 2017.
6. Section 139AA(2) of the Income Tax
Act,1961 provides that every person who has been allotted PAN as on the 1st day
of July, 2017, and who is eligible to obtain Aadhaar, shall intimate his
Aadhaar on or before a date to be notified by the Central 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.
7. The Hon’ble Supreme
Court has upheld Section 139AA(1) which mandatorily requires quoting of Aadhaar
for new PAN applications as well as for filing of returns.
8. The Hon’ble Supreme
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.
9. 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 Hon’ble Supreme
Court has unequivocally stated as follows:
“125. 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 Privacy 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 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 Parliament to consider as to
whether there is a need to tone down the effect of the said proviso by limiting
the consequences.”
10. Finally the effect of the judgement is as
following
(i) From
July 1, 2017 onwards, every person eligible to obtain Aadhaar must quote
their Aadhaar number or their Aadhaar Enrolment ID number for filing of Income
Tax Returns as well as for applications for PAN;
(ii) Everyone who has been allotted permanent
account number as on the 1st day of July, 2017, 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;
(iii) However, 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 Tax Act for failing to quote PAN may not arise.
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DSM
