PAN-Aadhaar Linking for ITR Filing Valid, Aadhaar for Govt. Subsidies OK: SC Judgement

PAN-Aadhaar Linking for ITR Filing Valid, Aadhaar for Govt. Subsidies OK: SC Judgement upholds Constitutional Validity of Aadhaar

Hon’ble Supreme Court of India (SC) has upheld the constitutional validity of Aadhaar project. Now Aadhaar is mandatory for availing benefits of Government subsidies and for filing Income Tax Returns (linking of PAN with Aadhaar).

However, Aadhaar is no more required for linking of mobile connection, bank account, etc. Hon’ble SC has set aside the GOI Circular dt. 23 March 2017 (treating the same as unconstitutional/ not backed by law) relating to directions for mobile operators to link the mobile connections with Aadhaar. Similarly RBI Notifications/ directions issued under PML Rule 9A to link bank account with Aadhaar have been set aside.

Besides, the CBSE, NEET, JEE, UGC, etc Educational Regulators/ Institutions can’t force Aadhaar requirement for admissions/ examinations. Also, minor children can’t be denied benefits under welfare schemes for want of Aadhaar, as any other documents shall be acceptable.

Conclusion paras on page 1442 to 1446 of the Judgement of Hon’ble Supreme Court of India on Constitutional Validity of Aadhaar (dt. 26 sept. 2018) are being reproduced for reference, here-under:

(1) The requirement under Aadhaar Act to give one’s demographic and biometric information does not violate fundamental right of privacy.

(2) The provisions of Aadhaar Act requiring demographic and biometric information from a resident for Aadhaar Number pass three­fold test as laid down in Puttaswamy (supra) case, hence cannot be said to be unconstitutional.

(3) Collection of data, its storage and use does not violate fundamental Right of Privacy.

(4) Aadhaar Act does not create an architecture for pervasive surveillance.

(5) Aadhaar Act and Regulations provides protection and safety of the data received from individuals.

(6) Section 7 of the Aadhaar is constitutional. The provision does not deserve to be struck down on account of denial in some cases of right to claim on account of failure of authentication.

(7) The State while enlivening right to food, right to shelter etc. envisaged under Article 21 cannot encroach upon the right of privacy of beneficiaries nor former can be given precedence over the latter.

(8) Provisions of Section 29 is constitutional and does not deserves to be struck down.

(9) Section 33 cannot be said to be unconstitutional as it provides for the use of Aadhaar data base for police investigation nor it can be said to violate protection granted under Article 20(3).

(10) Section 47 of the Aadhaar Act cannot be held to be unconstitutional on the ground that it does not allow an individual who finds that there is a violation of Aadhaar Act to initiate any criminal process.

(11) Section 57, to the extent, which permits use of Aadhaar by the State or any body corporate or person, in pursuant to any contract to this effect is unconstitutional and void. Thus, the last phrase in main provision of Section 57, i.e. “or any contract to this effect” is struck down.

(12) Section 59 has validated all actions taken by the Central Government under the notifications dated 28.01.2009 and 12.09.2009 and all actions shall be deemed to have been taken under the Aadhaar Act.

(13) Parental consent for providing biometric information under Regulation 3 & demographic information under Regulation 4 has to be read for enrolment of children between 5 to 18 years to uphold the constitutionality of Regulations 3 & 4 of Aadhaar (Enrolment and Update) Regulations, 2016.

(14) Rule 9 as amended by PMLA (Second Amendment) Rules, 2017 is not unconstitutional and does not violate Articles 14, 19(1)(g), 21 & 300A of the Constitution and Sections 3, 7 & 51 of the Aadhaar Act. Further Rule 9 as amended is not ultra vires to PMLA Act, 2002.

(15) Circular dated 23.03.2017 being unconstitutional is set aside.

(16) Aadhaar Act has been rightly passed as Money Bill. The decision of Speaker certifying the Aadhaar Bill, 2016 as Money Bill is not immuned from Judicial Review.

(17) Section 139­AA does not breach fundamental Right of Privacy as per Privacy Judgment in Puttaswamy case.

(18) The Aadhaar Act does not violate the interim orders passed in Writ Petition (C) No. 494 of 2012 and other Writ Petitions.

Major Highlights of SC Judgment on “PAN-Aadhaar Linking” as per CBDT

The CBDT has issued a Press Release indicating Major Highlights of the SC Judgment on “Linking of Aadhaar with PAN”, i.e. those who are eligible to obtain, or have been allotted Aadhaar, must intimate Income Tax Deptt. for PAN-Aadhaar Linking and must quote their Aadhaar Number/ Enrollment ID for filing ITR/ PAN Applications, besides partial relief for those not having Aadhaar, as under:

PAN-Aadhaar Linking- SC Judgement: CBDT Press Release dt. 10 June 2017

i) The Hon’ble Supreme Court of India in its Landmark Judgement has upheld Section 139AA 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. 

ii) 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.

iii) 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.

iv) 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.

v) Section 139AA(1) of the Income Tax Act, 1961 as introduced  by the Finance Act, 2017 provides for mandatory quoting of Aadhaar/ Enrollment 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.

vi) 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.

vii) 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.

viii) 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.

ix) 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 enroll 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.” 

x) Finally the effect of the judgement is as following:

a) 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;

b) 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;

c) 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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PAN-Aadhaar linking mandatory now; ITR Filers to comply by 31 March 2019: CBDT

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