Explaining the Supreme Court's Aadhaar-PAN verdict in a nut-shell

The centre had to defend before the SC, the validity of Section 139AA of the Income Tax act.

The Supreme Court on Friday upheld the law that made the UID number a must for filing income tax returns and its linkage to PAN card. This was a major victory for the Narendra Modi government which has been making Aadhaar mandatory for many transactions.

The centre had to defend before the SC, the validity of Section 139AA of the Income Tax act introduced through the Finance Act, 2017. In the 155 page judgment, the court said, "We hold that Parliament was fully competent to enact Section 139AA of the I-T Act and its authority to make this law was not diluted by the orders of this court."

The court clarified that, "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". Broadly this would mean that those who have a PAN and are yet to get their Aadhaar can still file their IT returns this year.

Further the court said that Section 139AA would be applied prospectively. The government needed to take urgent measures to assuage citizens' apprehension about the leakage of data concerning Aadhaar and PAN linkage, the 155 page judgment also read.

Verdict in a nut-shell

"A person who is holder of PAN and if his PAN is invalidated (for want of Aadhaar linkage as he did not have Aadhaar number), he is bound to suffer immensely in his day-to-day dealings, which situation should be avoided till the Constitution bench of the SC authoritatively determined the validity of Aadhaar."

"If failure to intimate the Aadhaar number renders PAN void ab initio with the deeming provision that the PAN allotted would be invalid as if the person had not applied for allotment of PAN, it would have rippling effect of unsettling settled rights of parties. It has the effect of undoing all the acts done by a person on the basis of such a PAN."

"It may have even the effect of incurring other penal consequences under the Act for earlier period on the ground that there was no PAN registration by a particular assessee. Hence, the law would apply prospectively."

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