The Supreme Court today upheld the validity of an Income Tax Act provision making Aadhaar mandatory for the allotment of PAN cards and filing of tax returns, but put a partial stay on its implementation till a Constitution bench addressed the issue of right to privacy.
A bench comprising Justices A K Sikri and Ashok Bhushan also upheld the legislative competence of Parliament in enacting Section 139AA of the Income Tax (I-T) Act.
It, however, clarified that it had not touched upon the issue of right to privacy and concerns that the Aadhaar scheme affected the human dignity, which, it said, had to be decided by the Constitution bench.
It said the I-T Act provision was valid subject to the outcome of the batch of petitions before its Constitution bench which was examining if the Aadhaar scheme infringed on the right to privacy and if there was any threat of data leakage.
The bench asked the government to take appropriate steps to ensure there was no leakage of data from the Aadhaar scheme.
“The government to take proper and appropriate steps and the scheme in this regard has to be devised at the earliest till confidence among the citizens that the data would not be leaked,” the bench said.
The bench made it clear that there was no conflict between the impugned provisions of the Income Tax Act and the Aadhaar Act.
It also said that PAN cards without Aadhaar number would not be treated invalid till the Constitution bench decided the larger issue of right to privacy.
It said previous transactions would not be affected or nullified with partial stay on the new law till privacy issue linked to Aadhaar was decided.
The court had on May 4 reserved the verdict on a batch of petitions challenging section 139AA of the I-T Act, which was introduced through the latest budget and the Finance Act, 2017.
Section 139AA of the Income Tax Act provides for mandatory quoting of Aadhaar or enrolment ID of Aadhaar application form for filing of income tax returns and making application for allotment of PAN with effect from July 1 this year.
The Centre had earlier said that the programme of PAN (Permanent Account Number) had become suspect as it could be faked, while Aadhaar was a “secure and robust” system by which the identity of an individual could not be faked.
While opposing the government’s move, the petitioners, including CPI leader Binoy Viswam, have contended before the bench that the Centre cannot “belittle” the apex court’s 2015 order holding the unique identification number as voluntary.
They had argued that government should not have enacted section 139AA in the Act to make Aadhaar mandatory for PAN as the apex court’s five-judge bench order was clear that Aadhaar was voluntary and not mandatory.
However, Attorney General Mukul Rohatgi had contended that Aadhaar was made mandatory for allotment of PAN to weed out fake cards which were used for terror financing and circulation of black money.
Rohatgi had said that with the implementation of Aadhaar, the government had saved over Rs 50,000 crore on various schemes to benefit the poor as well as pension schemes.
The Centre had also told the court that fake PAN cards were being used to “divert funds” to shell companies.
The Supreme Court had observed that it was yet to be “tested” whether Aadhaar violated protection of life and personal liberty granted under Article 21 of the Constitution, which was pending hearing for an authoritative pronouncement by a five-judge Constitution Bench.