The Supreme Court of India in its Landmark Judgement in (Binoy Viswam vs Union of India) 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.
The 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.
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 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.’
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.
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.
The Supreme Court has upheld Section 139AA(1) which mandatorily requires quoting of Aadhaar for new PAN applications as well as for filing of returns.
The 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.
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 Planning Commission constituted the Unique Identification Authority of India through a notification dated January 28, 2009. Thus, the Aadhaar scheme did not have any statutory backing when it was launched and continued to operate in exercise of the executive power of the government until 2016, when the government enacted the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (Aadhaar Act). On August 11, 2015, the Supreme Court passed an interim order stating that the Aadhaar card was to be used only for the PDS scheme and for the LPG distribution scheme, with a clear mandate that it ought not to be used by the government for any other purpose.
The primary contention of the petitioners in the instant challenge was that the parliament did not have the legislative competency to enact section 139AA of the IT Act violating the interim orders of the court. It is pertinent to note that the parent statute, i.e., the Aadhaar Act, does not make it mandatory for citizens to obtain Aadhaar cards. The petitioners further submitted that the only way by which the parliament could have overcome the interim orders of the court was by removing the very basis of those orders; in the instant case, that could have been done by making it mandatory for all citizens to obtain Aadhaar card under the Aadhaar Act.
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.