Quoting of Aadhaar Number in Return of Income – Is it mandatory?

BACKGROUND

The Finance Act 2017 has inserted a new Section 139AA which has come into force with effect from April 1, 2017. Under this Section, it is mandatory for quoting of Aadhaar Number for obtaining PAN and in filing Return of Income (ROI). The main purpose behind enacting this new Section 139AA is to check menace of black money as well as to cover those persons who are evading tax payments. The purpose is also to weed out fake PAN cards which were used for terror financing and circulation of black money.

RELEVANT PROVISIONS

(i)Every person who is eligible to obtain Aadhaar number has to quote the same on or after July 1, 2017 

– Application for allotment of PAN; and 

– ROI

(ii)If a person has not received Aadhaar Number, he will have to quote the Enrolment ID of Aadhaar application issued to him.

(iii)Every person who is allotted PAN as on July 1, 2017 and who is eligible to obtain Aadhaar number, will have to intimate his Aadhaar number to such authority on or before the date to be notified by the government in prescribed 

(iv)If the above intimation as stated in (iii) above is not given, the PAN given to the person shall become 

(v)The provisions of this section shall not apply to such persons as may be notified by the Central government.

TO WHOM IT IS APPLICABLE

The new section is applicable only to those persons who are eligible to obtain Aadhaar number. All residents individuals in India are eligible to obtain Aadhaar number.
Non-residents, HUF, firms, LLPs, APOs, companies, etc. are not eligible to obtain Aadhaar number and, therefore, this new section will not apply to them.

DOCUMENTS WHERE QUOTING OF AADHAAR NUMBER IS MANDATORY

(a) In the application for allotment of PAN, i.e. in Form 49A

(b) In ROI which is to be filed on or after July 1, Thus, even in the case of ROI of earlier years, either filed belated or revised after July 1, 2017, it will be mandatory to quote Aadhaarnumber in such returns.

CONSEQUENCES OF NONCOMPLIANCE

In view of proviso to Section 139AA(2), if there is a non-compliance, then PAN allotted to such person shall become invalid and other provisions of the Income Tax Act shall also apply as if such person had not applied for allotment of PAN.

SUPREME COURT FINDINGS

Certain social activist have filed petition before the Supreme Court (SC) challenging the new law. The SC heard the petition and held in the case of BinoyViswamvs Union of India (82 taxmann.com 211) that Section 139AA of the Income Tax Act is constitutionally valid and is not discriminatory, nor does it offend equality clause enshrined in Article 14 of the Constitution. However, the SC has given partial relief to those who do not have Aadhaar and who do not wish to obtain Aadhaar for the time being,stating that their PAN will not be cancelled.

CONCLUSION

Subsequent to SC judgement, a press release was issued by CBDT dated June 10, 2017, where the effect of the SC decision has been summarized as under:

(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 

(ii)Everyone who has been allotted permanent account number as on July 1, 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, those who do not have Aadhaar and who do not wish to obtain Aadhaar for the time being, the SC has ruled that their PAN will not be cancelled.