A day after the Supreme Court upheld the Centre’s amendment to the Income Tax Act making it compulsory for assessees to link their PAN and Aadhaar numbers, the Central Board of Direct Taxes (CBDT) stated that it would be mandatory for those who have Aadhaar to quote it for filing tax returns or for obtaining a new PAN from July 1. The CBDT said that the apex court has given “only a partial relief” to those who do not have an Aadhaar or those who do not wish to obtain Aadhaar for the time being, and therefore, tax authorities will not invalidate their Permanent Account Number (PAN).
The CBDT, the policy-making body of the income tax department, also said that since this course of action is being adopted 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 (treating PAN invalid of those assessees who do not have Aadhaar) by limiting the consequences.”
“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 enrol 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,” the statement said.
It further said, “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.”
Explaining what will happen in a case of “non-compliance” or where a person does not possess Aadhaar, the the Central Board of Direct Taxes said, “Only a partial relief by the Court (SC) 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.”
The statement follows Supreme Court judgment on Friday after a clutch of petitions challenging the constitutional validity of Section 139AA of the IT Act, introduced by way of the Finance Act of 2017 in March this year.
Sub-section 1 of Section 139AA required assessees to furnish their Aadhaar number while applying for PAN card and while filing their income tax return. Sub-section 2 said that the PAN cards of all those who already had their Aadhaar cards made or were eligible for it will be deemed invalid if they did not submit their Aadhaar numbers to the designated authority (for linking PAN and Aadhaar).
The apex court upheld the validity of sub-section 1 but ordered a partial stay on the operation of sub-section 2. This was done to avoid difficulty to genuine assessees until the time a separate batch of pending petitions which has questioned the privacy issues raised by the Aadhaar scheme is decided by a Constitution Bench of the Court.