According to newly inserted section 139AA by the Finance Act, 2017 in the Income Tax Act, 1961:
Quoting of Aadhaar number.
139AA. (1) Every person who is eligible to obtain Aadhaar number shall, on or after the 1st day of July, 2017, quote Aadhaar number—
(i) In the application form for allotment of permanent account number;
(ii) In the return of income:
Provided that where the person does not possess the Aadhaar number, the Enrolment ID of Aadhaar application form issued to him at the time of enrolment shall be quoted in the application for permanent account number or, as the case may be, in the return of income furnished by him.
(2) Every person who has been allotted permanent account number as on the 1st day of July, 2017, and who is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to such authority in such form and manner as may be prescribed, on or before a due date to be notified by the Central Government in the Official Gazette:
Provided that in case of failure to intimate the Aadhaar number, the permanent account number allotted to the person shall be deemed to be invalid and the other provisions of this Act shall apply, as if the person had not applied for allotment of permanent account number.
(3) The provisions of this section shall not apply to such person or class or classes of persons or any State or part of any State, as may be notified by the Central Government in this behalf, in the Official Gazette.
Explanation- For the purposes of this section, the expressions
(i)“Aadhaar number”, “Enrolment” and “resident” shall have the same meanings respectively assigned to them in clauses (a), (m) and (v) of section 2 of the Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016(28 of 2016)
(ii)“Enrolment ID” means a 28 digit Enrolment Identification Number issued to a resident at the time of enrolment.
As Inserted by Finance Act No. 7 of 2017, (w.e.f. 1-4-2017)
On 21.04.2017, Hon’ble Supreme Court has asked Centre “How can you make Aadhaar card mandatory when we have passed an order to make it optional? Is making Aadhaar mandatory by force the only way to tackle the menace of fraud and fake PAN (permanent account number) cards?”. The Court asked this in reference to a PIL in respect of making compulsory Aadhaar(as per section 139AA) in respect of filing of income tax returns in respect of this, response of the Central Government was PAN cards were found to be misused, and the only option to combat this problem was to make Aadhaar mandatory. It was found that a number of PAN cards were being used to divert funds to shell companies. To prevent it (from happening), the only option was to make Aadhaar card mandatory. It is expected that the Apex Court will deliver final verdict in this respect on 25.04.2017.
The Supreme Court had on March 27,2017 made it clear that Aadhaar cards cannot be made mandatory by the government for extending benefits of social welfare schemes.
In Justice K.S.Puttaswamy (Retd) vs. Union Of India [Writ Petition (Civil) No.494 Of 2012, decided on 11 August, 2015] after considering the matter, the learned Judges were of the view that the balance of interest would be best served, till the matter is finally decided by a larger Bench if the Union of India or the UIDA proceed in the following manner:-
1. The Union of India shall give wide publicity in the electronic and print media including radio and television networks that it is not mandatory for a citizen to obtain an Aadhaar card;
2. The production of an Aadhaar card will not be condition for obtaining any benefits otherwise due to a citizen;
3. The Unique Identification Number or the Aadhaar card will not be used by the respondents for any purpose other than the PDS Scheme and in particular for the purpose of distribution of foodgrains, etc. and cooking fuel, such as kerosene. The Aadhaar card may also be used for the purpose of the LPG Distribution Scheme;
4. The information about an individual obtained by the Unique Identification Authority of India while issuing an Aadhaar card shall not be used for any other purpose, save as above, except as may be directed by a Court for the purpose of criminal investigation.
There are discrepancies, in many cases, in respect of spellings, date of birth, phone number, address, etc. in the data of PAN and Aadhaar, it becomes practically not possible to link Aadhaar with Income tax e-return filing site in such cases. For getting the desired results Income Tax Department may update its PAN database by another measures. There may be finger prints requirements on a PAN application. Also, papers/ proof required for allotment of PAN should be made foolproof.