File your tax returns as usual: SC orders stay on Aadhaar-PAN linking

The Supreme Court of India on 9 June partially stayed Section 139 AA of the Income Tax Act brought by the Centre in the current financial year amendment, striking down the mandatory requirement of having an Aadhaar card to file income tax returns.

This means that those who currently do not have an Aadhaar number will not face criminal consequences for not linking it to their PAN card. The court also stayed the retrospective invalidation of PAN cards for non-compliance.

Privacy concerns

A division Bench of Justices A K Sikri and Ashok Bhushan gave what can only be seen as an interim order as this verdict is valid only till such time that a larger bench decides on the validity of the Aadhaar card itself, as the main challenge is whether the Aadhaar card violates the privacy of citizens.

This is especially in view of the fact that widespread data breach rattled India recently. The court warned that the government should ensure that “there is no chance of data leakage by the Aadhaar officials or the contractors”.

The Constitutional Bench, set to meet after the summer vacation of the Supreme Court will debate issues such as the infringement of privacy, Article 21 of the Constitution which guarantees the Right to Life.

However, the current petitions by CPI(M) leader Bimon Viswam from Kerala and a few others only present a limited challenge to the amendment to Section 139 AA in the IT Act which mandated linking the Aadhaar card to PAN card for filing of income tax returns from 1 July.

Invalidating PAN cards of citizens who have not linked to Aadhaar would result in serious consequences, the bench said, adding that “fake PAN cards are a threat”.

Welfare schemes

Over the past few months, the government has mandated having an Aadhaar card to avail various schemes, from cooking gas subsidies to school children getting mid-day meals.

As cards are yet to be obtained by a large number of citizens, the move make it hard for many to avail such welfare schemes.

Ironically, in the past, Prime Minister Narendra Modi severely criticised the Aadhaar when the UPA was in power, saying that it was not “magic”.

Dealing with the fakes

Earlier, the SC had made it clear that Aadhaar was voluntary and not mandatory. But the stand of the Centre is that Aadhaar needs to be mandatory as fake PAN cards are being used in the country, and endangering national security by being used to fund terrorism and aiding in the circulation of black money.

Centre’s argument was simple: while a PAN card can be faked, an Aadhaar card cannot be. Attorney General Mukul Rohtagi had argued that the government could save Rs 50,000 crore in various beneficial schemes by linking the two as fake PAN cards are being used to divert large amount of funds to shell companies. 

Now the question of Aadhaar itself shifts to the Constitution Bench. Till then, today’s verdict will hold sway.