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There appears to be a lot of ambiguity around the role of Aadhaar for the purpose of return filing especially in the background of the Supreme Court decision which ruled that a PAN would continue to remain valid even if Aadhaar is not obtained and linked with PAN. This article makes an attempt to bring in an element of clarity in this regard.
The last date for linking Aadhaar with PAN has been extended to 31st March 2022.
Section 139AA was inserted into the Income Tax Act vide Finance Act 2017 wherein it imposed the following mandates :
(a) Every person who is “eligible to obtain an Aadhaar”, must quote the Aadhaar number in the PAN application form as well as the return of income with effect from 1 July 2017.
(b) Those who did not possess the Aadhaar number could quote their Aadhar enrollment ID in the return of income.
(c) Every person who had been allotted PAN as on 1 July 2017, and has received the Aadhaar number, must intimate the number to the tax authorities by linking PAN and Aadhaar.
(d) Failure to intimate Aadhaar number would lead to the PAN being inoperative.
The constitutional validity of the section 139AA was mentioned before the Hon’ble Supreme Court (SC). The SC, in its judgement, upheld the legal validity of this section in its entirety and provided partial relief. The relief was in respect to Point (d), where the SC declared that the non-obtaining of an Aadhaar number would not lead to PAN becoming inoperative.
The income tax department has notified the manner in which the PAN will become inoperative if not linked to aadhaar within the specified due date. If the PAN becomes inoperative, it will be deemed that the PAN was not furnished or intimated wherever required and all the consequences of non-furnishing of PAN will be applicable to the individual.The same will be operative only after the date of linking with aadhaar PAN. (notification no 11/2020)
Accordingly, all other provisions of section 139AA in respect to quoting Aadhaar or Aadhaar enrolment number in the return of income or linking of Aadhaar with PAN etc. would continue to hold good.
Ref : Press Release dated 10 June 2017 (pursuant to the SC decision)
Mandatory quoting of Aadhaar or enrolment ID shall apply only to a person who is eligible to obtain Aadhaar number. According to the Aadhaar Act, 2016, Aadhaar needs to be obtained only by an individual who qualifies as a resident.
Further, a resident individual is one who has resided in India for a period of 182 days or more in the twelve months immediately preceding the date of application for enrolment. Therefore, an individual who is not a resident as per the Act is not required to quote his Aadhaar number under section 139AA.Here, residential status as per the Aadhaar Act is more relevant than residential status as per the Income Tax Act, 1961.
One must note that there could be a possibility that a taxpayer could qualify as a resident under the provisions of income tax and as a non-resident according to the Aadhaar Act. Such taxpayers would be given the benefit of non-quoting of Aadhaar number in their return of income.