[Opinion] Does the New CBDT Notification on Pan-Aadhaar Linking Sufficiently Address Taxpayer Concerns?

CA S. Krishnan – [2024] 162 taxmann.com 486 (Article)

1. Introductory Remarks

The linking PAN and Aadhar has been receiving the attention of the Government since quite some time and the intention of PAN-Aadhar linking was to eliminate bogus PAN Cards. With this intention the Finance Act, 2021 inserted a new section 234H in the Income-tax Act (the Act) to complete the process of PAN-Aadhaar linking for identifying bogus PANs. This section provides that where a person who is required to intimate his Aadhaar under sub-section (2) of section 139AA of the Act fails to do so on or before a notified date, he shall be liable to pay a fee not exceeding a sum of one thousand rupees, as may be prescribed, at the time of making intimation under sub-section (2) of section 139AA of the Act after the said date.

With this laudable object in mind various notifications, circulars and press releases have been issued by the Central Board of Direct Taxes (CBDT) from time to time and whenever any issue is faced by the assessees on account of these notifications, circulars and press releases, the CBDT has not hesitated to bring in remedial measures in this regard

Let us begin our discussion with press note dated 28th March, 2023 issued by the CBDT

2. Press Release dated 28th March 2023

The CBDT through this press release extended last date for linking of Pan-Aadhar by stating as under-

“In order to provide some more time to the taxpayers, the date for linking PAN and Aadhaar has been extended to 30th June, 2023, whereby persons can intimate their Aadhaar to the prescribed authority for Aadhaar-PAN linking without facing repercussions. Notification to this effect is being issued separately.

Under the provisions of the Income-tax Act, 1961 every person who has been allotted a PAN as on 1st July, 2017 and is eligible to obtain Aadhaar Number, is required to intimate his Aadhaar to the prescribed authority on or before 31st March, 2023, on payment of a prescribed fee. Failure to do so shall attract certain repercussions under the Act w.e.f. 1st April, 2023. The date for intimating Aadhaar to the prescribed authority for the purpose of linking PAN and Aadhaar has now been extended to 30th June, 2023.

From 1st July, 2023, the PAN of taxpayers who have failed to intimate their Aadhaar, as required, shall become inoperative and the consequences during the period that PAN remains inoperative will be as follows:

(i) no refund shall be made against such PANs;

(ii) interest shall not be payable on such refund for the period during which PAN remains inoperative; and

(iii) TDS and TCS shall be deducted/collected at higher rate, as provided in the Act.

The PAN can be made operative again in 30 days, upon intimation of Aadhaar to the prescribed authority after payment of fee of Rs.1, 000/-.

Those persons who have been exempted from PAN-Aadhaar linking will not be liable to the consequences mentioned above. This category includes those residing in specified States, a non-resident as per the Act, an individual who is not a citizen of India or individuals of the age of eighty years or more at any time during the previous year”.

It was also mentioned in the press release that more than 51 crore PANs have already been linked with Aadhar till date. A link for linking PAN with Aadhar was also provided in that press release.

3. Amendment of Rule 114AAA of Income-tax Rules

Through the notification under reference no. G.S.R. 227(E) [NO. 15/2023/F.NO. 370142/14/2022-TPL], dated 28th March, 2023. rule 114AAA of the Income-tax Rules was amended vide Income-tax (Fourth Amendment) Rules 2023 in consonance with the press release.

It was also provided that the sub-rule shall have effect from the date specified by the Board. The date was specified as 30th June, 2023 as per Press Release dated 28th March, 2023 (supra).

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