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).|
|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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