By TIOL News Service

NEW DELHI, JUNE 10, 2017: THE question before the Bench is - Whether the provisions of Section 139AA are violative of spirit of Articles 14 and 19 of the Constitution. No is the answer.

Facts of the case

The petitioner questions the constitutional validity of provisions of Section 139AA inserted by the Finance Act, 2017 mandating quoting of Aadhaar for PAN and filing of ITR from July 1, 2017. . Proviso to sub-section (1) gives relaxation from quoting Aadhaar number to those persons who do not possess Aadhaar number but have already applied for issuance of Aadhaar card. In their cases, the Enrolment ID of Aadhaar application form is to be quoted. It would mean that those who would not be possessing Aadhaar card as on July 01, 2017 may have to necessarily apply for enrolment of Aadhaar before July 01, 2017.

Proviso to sub-section (2) of Section 139AA of the Act stipulates the consequences of failure to intimate the Aadhaar 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. Sub-section (3), however, gives discretion to the Central Government to exempt such person or class or classes of persons or any State or part of any State from the requirement of quoting Aadhaar number in the application form for PAN or in the return of income.

Petitioner argued that though Aadhaar Act prescribes that enrolment under the said Act is voluntary and gives choice to a person to enrol or not to enrol himself and obtain Aadhaar card, the compulsive element thrusted in Section 139AA of the Act makes the said provision unconstitutional.

After hearing parties, the Apex Court held that,

++ the Parliament is fully competent to enact Section 139AA;

++ we do not find any conflict between the provisions of Aadhaar Act and Section 139AA of the Income Tax Act inasmuch as when interpreted harmoniously, they operate in distinct fields.

++ 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 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;

++ the validity of the provision upheld 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.

(See 2017-TIOL-231-SC-IT)