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CA Atul Modani

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Section 139AA of the Income-tax Act, 1961 as introduced by the Finance Act, 2017 provides for mandatory quoting of Aadhar / Enrolment ID of Aadhar application form, for a) making an application for allotment of Permanent Account Number and b) filing of return of income with effect from 1st July, 2017.

The effect of this provision, thus, is that every person who desires to obtain PAN card or who is an assessee has to necessarily enroll for Aadhar. It makes obtaining of Aadhar card compulsory for those persons who are income-tax assessees.

Proviso to sub-section (2) of Section 139AA of the Act stipulates the consequences of failure to intimate the Aadhar number. In those cases, PAN allotted to such persons would become INVALID not only from July 01, 2017, but from its inception as the deeming provision in this proviso mentions that PAN would be invalid as if the person had not applied for allotment of PAN, i.e. from the very beginning.

The Constitutional validity of Section 139AA of the Income Tax Act, 1961 was challenged via Three Civil Writ Petitions in Hon Supreme Court bearing number 247, 277 & 304 of 2017. Hon’ble Justice A.K. Sikri pronounced the judgment of the Bench comprising His Lordship and Hon’ble Mr.Justice Ashok Bhushan on 9th June 2017.

Following are the fine points of the Judgement of Justice A.K. Sikri :

(i) We hold 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.

(ii) We do not find any conflict between the provisions of Aadhar Act and Section 139AA of the Income Tax Act in as much as when interpreted harmoniously, they operate in distinct fields.

(iii) Section 139AA of the Act is not discriminatory nor it offends equality clause enshrined in Article 14 of the Constitution.

(iv) Section 139AA is also not violative of Article19(1)(g) of the Constitution insofar as it mandates giving of Aadhaar enrollment number for applying PAN cards in the income tax returns or notified Aadhaar enrollment number to the designated authorities. Further, proviso to sub-section (2) thereof has to be read down to mean that it would operate only prospective.

(v) The validity of the provision upheld in the aforesaid manner is subject to passing the muster of Article 21 of the Constitution, which is the issue before the Constitution Bench in Writ Petition (Civil) No. 494 of 2012 and other connected matters. Till then, there shall remain a partial stay on the operation of proviso to sub-section (2) of Section 139AA of the Act, as described above.

Writ Petition (Civil) number 494 of 2012 is pending before the Supreme Court over various issues pertaining to Aadhar Card. Last hearing of the same was done in 2015.  Same is referred to a larger bench for final view for final disposal.\

There is a confusion as to execution of section 139AA of Income Tax Act as many newspapers / news channels reported differently the judgement of Supreme Court on the matter of mandatory quoting of AADHAR card while filing Income Tax Return or while applying for PAN Card.

However the guidelines issued by Supreme Court until final disposal of Writ Petition (Civil) number 494 of 2012 by constitution bench is quite clear and are summarized as below for the sake of clarity and necessary execution.

Sr Outcome Basis Prescribed by Supreme Court
1 Those who are not PAN holders currently, while applying for PAN  are required to give Aadhar number/ Aadhar Enrollment ID This is the stipulation of sub-section (1) of Section 139AA, which Supreme Court have upheld as constitutional. (Para No. 125)
2 Those who are PAN holders currently will quote their Aadhar number/ Aadhar Enrollment ID while filing Income Tax Return w.e.f. 1st July 2017 This is the stipulation of sub-section (1) of Section 139AA, which Supreme Court have upheld as constitutional. (Para No. 125)
3 Linking (Intimation to IT Department) of Aadhar Card & PAN on Income Tax Website is compulsory for those having PAN Number Those who have already enrolled themselves under Aadhar scheme would comply with the requirement of sub-section (2) of Section 139AA of the Act. (Para No. 125)
4 Those assessees who are not Aadhar card holders and do not comply with the provision of Section 139(2), their PAN cards will not be treated as invalid for the time being. It is only to facilitate other transactions which are mentioned in Rule 114B of the Income Tax Rules. 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 (Para No. 125)
5 It would be permissible for the Parliament to consider as to whether there is a need to tone down the effect of proviso to Sub Section 2 of Section 139 AA by limiting the consequences. It has the effect of undoing all the acts done by a person on the basis of such a PAN  (Para No. 126)
6 Supreme Court has find that proviso to Section 139AA (2) [failure to intimate the Aadhar number rendering PAN void ab initio] cannot be read retrospectively. If failure to intimate the Aadhar number renders PAN void ab initio with the deeming provision that the PAN allotted would be invalid as if the person had not applied for allotment of PAN would have rippling effect of unsettling settled rights of the parties. It has the effect of undoing all the acts done by a person on the basis of such PAN (Para No. 126).
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Taking proper measures to ensure that confidence is instilled among the public at large that there is no chance of unauthorised leakage of data of taxpayer whether it is done by tightening the operations of the contractors who are given the job of enrollment, they being private persons or by prescribing severe penalties to those who are found guilty of leaking the details, is the outlook of the Government. However, we emphasise that measures in this behalf are absolutely essential and it would be in the fitness of things that proper scheme in this behalf is devised at the earliest. Article 21 of the Constitution , pending disposal of WP ( C) 494 of 2012 (Para  No.127 )

Supreme Court has categorically mentioned in para 127 of its order that “we make it clear that Constitutional validity of this provision is upheld subject to the outcome of batch of petitions referred to the Constitution Bench where the said issue is to be examined.”

However looking at current status of no challenge to above judgement of SC via review petition, timeline of section 139 AA, the expected date of hearing of constitution bench and final disposal the above table will have to kept in mind while dealing with the issue off linking AADHAR Card with Pan card & quoting AADHAR Card while Filing Income Tax Return or while applying for PAN Card.

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28 responses to “AADHAR CARD– PAN Linking, Supreme Court Decision & Way forward”

  1. Vijaya Kumar says:

    My son is a NRI. He does not have a Adhaar card.
    He has Fixed deposits in India on which TDS is deducted at 30 percent. He files his IT Return & claims refund of the TTDS as the total income in India is not taxable.

    However, he has to pay Tax on this income in USA as per the rules prevailing in USA.

    As he does not have Adhaar card, please advise if he will be able to file the IT RETURN & claim refund of the TDS.

    Regards.

    Vijaya kumar

    • GANDHI MOHAN BHARATI says:

      The author has already clarified
      June 11, 2017 at 8:41 pm
      NRIs r exempt from applying for aadhar. Govt already clarified

  2. GANDHI MOHAN BHARATI says:

    The following statement, in my feeling will aid Tax evaders, who are not filing their ITRs. –

    Those assessees who are not Aadhar card holders and do not comply with the provision of Section 139(2), their PAN cards will not be treated as invalid for the time being. It is only to facilitate other transactions which are mentioned in Rule 114B of the Income Tax Rule

    Obviously Multiple PAN holders cannot get more than one Aadhar. It means that they can link only one Aadhar with one PAN.

    If they keep their income less than the taxable limit with no liability file ITR, then they can go Scot free because they do not have Aadhar.

    But the poor Aadhar holder has to link it with PAN

  3. Alka garg says:

    I am trying to link my PAN with Adhar numerous times.but due to mismatch in name i m trying to update my adhar online. Although my mob is mentioned on adhar card but unable to recieve OTP on my registeted mob. What to do ?

  4. SRINIVASAN RANGAMANNAR says:

    Is it enough if I quote Aadhaar no
    in ITR since linking aadhaar failed.

    • GANDHI MOHAN BHARATI says:

      As it stands as of now, there is no mention of linking. It is said that “one has to intimate” or “qoute” –

      “shall intimate his Aadhaar number to such authority
      in such form and manner as may be prescribed, on or before a 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.
      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:

      One is not clear as to mere quoting will do.

  5. Atul Modani says:

    There were initial hiccups when linking was made mandatory. However the process is now simplified and linking can be done within few minutes. Vide Press Release dated 11th May 2017, The Income Tax Department has made it easy for taxpayers to link their PAN with Aadhaar card.
    This was done keeping in mind grievances of taxpayers regarding difficulties in linking PAN with aadhar earlies as their names did not match in both systems (Eg. Names with initials in one and expanded initials in another), the Department has come out with a simple solution now.

    Easy New Procedure of Linking PAN & Aadhar:

    Taxpayers can go to incometaxindiaefiling.gov.in, click on the link on the left pane-> Link Aadhaar, provide PAN, Aadhaar no. and ENTER NAME EXACTLY AS GIVEN IN AADHAAR CARD (avoid spelling mistakes) and submit. After verification from UIDAI, the linking will be confirmed.

    It is necessary that Date of Birth, Gender & Aadhar Number is as per AADHAR Details. In case someone have only Birth year in aadhar, then there is a facility of tick on the website which can then be linked with Aadhar details.

    In case of any minor mismatch in Aadhaar name provided by taxpayer when compared to the actual data in Aadhaar, One Time Password (Aadhaar OTP) will be sent to the mobile registered with Aadhaar. Taxpayers should ensure that the date of birth and gender in PAN and Aadhaar are exactly same. In a rare case where Aadhaar name is completely different from name in PAN, then the linking will fail and taxpayer will be prompted to change the name in either Aadhaar or in PAN database.

    There is no need to login or be registered on E-filing website. This facility can be used by anyone to link their Aadhaar with PAN.

    This facility is also available after login on the e-filing website incometaxindiaefiling.gov.in under Profile settings and choose Aadhaar linking. The details as per PAN will be pre-populated. Enter Aadhaar no. and ENTER NAME EXACTLY AS GIVEN IN AADHAAR CARD (avoid spelling mistakes) and submit.

    • GANDHI MOHAN BHARATI says:

      I am sorry Sir that the Income Tax simplified method also does not work unless the names are exact Match.
      I live in a village with a popultion of 7,000. I try to help the poor Folks. Yesterday when I tried to help them I had 100% failure due to mismatch. Exapmple
      PAN -V mariyammal Aadhar – MARIYAMMAL
      PAN -SUBRAMNI Aadhar – A SUBRAMANI
      PAN – Thayammal Pandian Aadhar – THAYAMMAL P

  6. R DESIKAN says:

    sir, i hv a basic question on linking of Aadhaar with PAN Number. How the nonresidents will apply for aadhar card? Is the linking of aadhar is mandatory for NRI, also,who files income tax return? Since they are filing their return thro their representatives,can they give the adddress proof of their representatives?

  7. Krishnan Venkataraman says:

    A Foreigner of Indian Origin, with OCI Card and Pan Card (obtained long time go, but no Adhar card :Are they eligible to apply for an Adhar card now. If not will their existing Pan Card will be deemed invalid
    Pl clarify

    • Atul Modani says:

      The Central Board of Direct Taxes vide Press Release Dated 5th April 2017 clarified that such quoting of AADHAR is applicable only for Resident Indians.

  8. Abdulhaneed says:

    How to link pan with aadhar

  9. ram babu says:

    DHARMA SANDEHAM:-
    On invalidating the PAN – will the outstanding demands against that PAN will also become invalid…? please clarify.
    { if you buy a piece of land all the benefits – including Income TAx attached to it will be of the buyer. For any reason the agreement / sale of land is nullified…}

  10. ram babu says:

    Does Modiji want to achieve ? he COULD not achieve through demonetisation.

  11. J. A. Lakhkar says:

    While Govt is pushing for linking of PAN with Aadhar, the PAN system is causing grief to many PAN holders. I am a female who got married last year. I had PAN in my maiden name and address of my parental home, which I want to change to show my married name and marital name. For the last 6 months, NSDL is not able to do this change. To whom should I appeal ?

  12. Rakesh Milwani says:

    There have been cases where people have applied for Aadhar multiple times. However they have received a message that data has not been properly mapped and so to redo the process. What happens in such cases? Will Mr. Arunbhai Jetlishaeb clarify?

  13. GANDHI MOHAN BHARATI says:

    Sec 139AA provision (2) reads as under –
    (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 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.

    You have noted as under –

    Proviso to sub-section (2) of Section 139AA of the Act stipulates the consequences of failure to intimate the Aadhar number. In those cases, PAN allotted to such persons would become INVALID not only from July 01, 2017, but from its inception as the deeming provision in this proviso mentions that PAN would be invalid as if the person had not applied for allotment of PAN, i.e. from the very beginning. –

    I am of the opinion 01 July, 2017 is NOT the last date for linking; it is only the date on which the eligibility criteria is to be taken. The last date and the manner and authority is yet to be intimated.

    Unnecessary fear seems to being created among the people.

    I live in a village and locals are already talking about the terror regime.

    Has the Central Govt notified in Official Gazette the last date as 01 July, 2017 and the prescribed authoruty as IT Dept & the manner is by going through efiling website or SMS ??

    If so, kindly publish the Gazette.

    • Atul Modani says:

      These quotings r of SC , taken from its judgement. Even ITD clarified yesterday evening via a PR

      • GANDHI MOHAN BHARATI says:

        I am still not convinced by the reply. Press releases are one thing and statutory publication in gazette is another. Even AG in his argument quoted 01 July as the last date. Unfortunate that no one notices the Statute
        I have done enough searches and cannot come across any notification.
        One may quote enrollment number; but as Shri Rakesh Milwani has mentioned what to do when Aadhar is asked to be redone ?
        My Brother, who is 91 years and a retired IAS Officer, and who was issued Aadhar, when he went for Jeevan Praman for his pension, the e-sewva Kendra informed him that the data base of his biometrric data had got corrupted and have taken it again. Now he gets intimation that his Aadhar already exists.
        All is not well even with UIDAI.
        He will quote Aadhar in ITR and thats OK. !!!

  14. Gangaram says:

    Adhar is very reletive for and purpose of filing return of income for all person with linking the PAN for a valid return under Income tax. Apex court has confirmed its validity, Parliament is a body for making any lsw on any subject ,now there exits any daubt.
    Government of India should alert of its Agency for implimentation of new Rules

  15. MADAN LAL ARORA says:

    I need one clarification. My daughter’s name was pooja Arora and the PAN Number in the name of POOJA ARORA. After getting maried, her AADHAR Card was POOJA PASRICHA. Will it require change of PAN card from Arora to Pasricha. Will some body help me?

  16. Rajesh says:

    What about the people of Assam, Meghalaya and Jammu & Kashmir? Do they also need to update AADHAR?

    • Atul Modani says:

      Provisions of section 139AA shall not apply to Individual residing in the States of Assam, Jammu and Kashmir and Meghalaya – Refer Notification no. 37 dated 11th May 2017 issued by MOF -DOR

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