SC partially stays law making Aadhaar mandataory for PAN, exempts those without it for now

Those who possess an Aadhaar card must link it to their Permanent Account Number (PAN) card and those who have enrolled and not yet got their Aadhaar card are also exempted from mandatory linkage and the penalising invalidation of their PANs if they don’t link it.

Section 139AA of the Income Tax Act provides for mandatory quoting of Aadhaar or enrolment ID of Aadhaar application form for filing of IT returns and making application for allotment of PAN with effect from July 1 this year.

A bench comprising Justices AK Sikri and Ashok Bhushan, which upheld the legislative competence of the Parliament in enacting the law to this effect, said there was no conflict between the impugned provision of the Income Tax Act and the Aadhaar Act. 

It said that PAN card without Aadhaar number would not be treated invalid till the Constitution bench decides the larger issue of Right to Privacy. Further, the bench also clarified that there would be no retrospective implementation of the provision to invalidate the PAN for non-compliance of unique identification number under the Aadhaar scheme.

While reading the judgment, the bench said, "We are of the opinion that till Article 21 (concerning right to privacy) of the Constitution is decided by the Constitution bench, a partial stay is required (on Section 139 AA of IT Act)."

Upholding the validity of Section 139AA of the IT Act subject to the outcome of the batch of petitions before its Constitution bench which is examining if Aadhaar scheme infringes on the Right to Privacy and if there is threat of data leakage, the bench said PAN holders already having Aadhaar have to link both.

However, the bench asked the government to take appropriate steps to ensure there was no leakage of data from the Aadhaar scheme as apprehensions have been expressed that there was a possibility of the data being compromised. 

Section 139AA of the Income Tax Act provides for mandatory quoting of Aadhaar or enrolment ID of Aadhaar application form for filing of IT returns and making application for allotment of PAN with effect from July 1 this year.

The court had on May 4 reserved the verdict on a batch of petitions challenging section 139AA of the IT Act, which was introduced through the latest budget and the Finance Act, 2017.

The Centre had earlier said that the programme of PAN had become suspect as it could be faked, while Aadhaar was a "secure and robust" system by which the identity of an individual could not be faked.