The Supreme Court on Friday put a partial stay on the implementation of the provisions in the Income Tax (I-T) Act making Aadhaar number mandatory for allotment of PAN card and filing of income tax returns (ITR).
However, the apex court upheld the validity of Section 139AA of the I-T Act, subject to the outcome of the batch of petitions before its Constitution bench which is examining if the Aadhaar scheme infringes on the Right to Privacy and if there is threat of data leakage.
A bench comprising Justices A K Sikri and Ashok Bhushan also upheld the legislative competence of Parliament in enacting the law to this effect.
It also clarified that it has not touched upon the issue of Right to Privacy and other aspects that the Aadhaar scheme affects the human dignity which has to be decided by the Constitution bench.
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 card without Aadhaar number would not be treated invalid till the Constitution bench decides the larger issue of Right to Privacy.
It said previous transactions won't be affected or nullified with partial stay on the new law till privacy issue linked to Aadhaar is decided.
A bench comprising Justices A K Sikri and Ashok Bhushan had on May 4 reserved the verdict on the pleas, challenging section 139AA of the Income Tax (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 (Permanent Account Number) with effect from July 1 this year.
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 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.
ALSO READ | Soon, Aadhar card, mobile phone may be all you need for air travel
However, the Centre 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.
Attorney General Mukul Rohatgi had told the bench that the programme of PAN had become suspect as it could be faked, while Aadhaar is a "secure and robust" system by which the identity of an individual could not be faked.
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.
During the hearing, 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.
With inputs from PTI.