Filing ITR with Aadhaar & Penalty for not quoting PAN/Aadhaar : Budget 2019-20

By | July 7, 2019
(Last Updated On: July 7, 2019)

Inter-changeability of PAN & Aadhaar and mandatory quoting in prescribed transactions.

Existing sub-section (1) of section 139A of the Act, inter alia, provides that every person specified therein, who has not been allotted a PAN, shall apply to the Assessing Officer for allotment of PAN.

It has been observed that in many cases persons entering into high value transactions, such as purchase of foreign currency or huge withdrawal from the banks, do not possess a PAN. In order to keep an audit trail of such transactions, for widening and deepening of the tax base, it is proposed to insert a new clause (vii) in the aforesaid sub-section so as to provide that every person, who intends to enter into certain prescribed transactions and has not been alloted a PAN, shall also apply for allotment of a PAN

To ensure ease of compliance, it is also proposed to provide for inter-changeability of PAN with the Aadhaar number. Accordingly the provisions of section 139A are proposed to be amended so as to provide that,

(i) every person who is required to furnish or intimate or quote his PAN under the Act, and who, has not been allotted a PAN but possesses the Aadhaar number, may furnish or intimate or quote his Aadhaar number in lieu of PAN, and such person shall be allotted a PAN in the prescribed manner;
(ii) every person who has been allotted a PAN, and who has linked his Aadhaar number under section 139AA, may furnish or intimate or quote his Aadhaar number in lieu of a PAN.

Section 139A, inter alia, provides that every person, receiving a document relating to a transaction for which PAN is required to be quoted shall ensure that the PAN has been duly quoted therein. It is proposed to provide that every person receiving such documents shall also ensure that the PAN or the Aadhaar number, as the case may be, has been duly quoted.

A new sub-section (6A) is also proposed to be inserted to ensure quoting of PAN or Aadhaar number for entering into prescribed transactions and authontication thereof in the prescribed manner. Duty is also proposed to be cast upon the person receiving any document relating to such transactions, through newly proposed sub-section (6B), to ensure that PAN or Aadhaar number, as the case may be, is duly quoted, and authenticated.

In order to ensure proper compliance of the provisions relating to quoting and authentication of PAN or Aadhaar, the penalty provision contained in section 272B is proposed to be amended suitably.
These amendments will take effect from 1st September, 2019

[Clauses 40 & 64]

Clauses 40 of Finance Bill 2019

Amendment of section 139A

40. In section 139A of the Income-tax Act, with effect from the 1st day of September, 2019,–

(i) in sub-section (1), in clause (vi), for the words, brackets and figure “on behalf of the person referred to in clause (v)”, the following shall be substituted, namely:––

“on behalf of the person referred to in clause (v); or (vii) who intends to enter into such transaction as may be prescribed by the Board in the interest of revenue,”;

(ii) after sub-section (5D), the following sub-section shall be inserted, namely:––

“(5E) Notwithstanding anything contained in this Act, every person who is required to furnish or intimate or quote his permanent account number under this Act, and who,––

(a) has not been allotted a permanent account number but possesses the Aadhaar number, may furnish or intimate or quote his Aadhaar number in lieu of the permanent account number, and such person shall be allotted a permanent account number in such manner as may be prescribed;

(b) has been allotted a permanent account number, and who has intimated his Aadhaar number in accordance with provisions of sub-section (2) of section 139AA, may furnish or intimate or quote his Aadhaar number in lieu of the permanent account number.”;

(iii) in sub-section (6), for the words “the General Index Register Number”, the words “the General Index Register Number or the Aadhaar number, as the case may be,” shall be substituted;

(iv) after sub-section (6), the following sub-sections shall be inserted, namely:––

“(6A) Every person entering into such transaction, as may be prescribed, shall quote his permanent account number or Aadhaar number, as the case may be, in the documents pertaining to such transactions and also authenticate such permanent account number or Aadhaar number, in such manner as may be prescribed.

(6B) Every person receiving any document relating to the transactions referred to in sub-section (6A), shall ensure that permanent account number or Aadhaar number, as the case may be, has been duly quoted in such document and also ensure that such permanent account number or Aadhaar number is so authenticated.”;

(v) in sub-section (8), in clauses (b) and (f), for the words “the General Index Register Number”, the words “the General Index Register Number or the Aadhaar number, as the case may be,” shall be substituted

(vi) in the Explanation, for clause (a), the following clauses shall be substituted, namely:––

‘(a) “Aadhaar number” shall have the meaning assigned to it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016;

(aa) “Assessing Officer” includes an income-tax authority who is assigned the duty of allotting permanent account numbers;

(ab) “authentication” means the process by which the permanent account number or Aadhaar number alongwith demographic information or biometric information of an individual is submitted to the income-tax authority or such other authority or agency as may be prescribed for its verification and such authority or agency verifies the correctness, or the lack thereof, on the basis of information available with it;’.

Explanation of Clauses 40 of Finance Bill 2019

Clause 40 of the Bill seeks to amend section 139A of the Incometax Act relating to permanent account number. Sub-section (1) of the said section, inter alia, provides that every person specified therein and who has not been allotted a permanent account number shall apply to the Assessing Officer for allotment of a permanent account number.

It is proposed to insert a new clause (vii) in the said sub-section so as to provide that every person, who intends to enter into such transaction, as may be prescribed by the Board in the interest of revenue, shall also apply to the Assessing Officer for allotment of a permanent account number.

It is further proposed to insert a new sub-section (5E) in the said section to provide that notwithstanding anything contained in this Act, every person who is required to furnish or intimate or quote his permanent account number under this Act, and who, has not been allotted a permanent account number and possesses the Aadhaar number, may, furnish or intimate or quote his Aadhaar number in lieu of permanent account number, and such person shall be allotted a permanent account number in such manner as may be prescribed. Further, every such person who has been allotted a permanent account number, and who has intimated his Aadhaar number in accordance with provisions of sub-section (2) of section 139AA may, furnish or intimate or quote his Aadhaar number in lieu of a permanent account number.

It is also proposed to amend sub-section (6) of the said section to provide that every person receiving document relating to a transaction prescribed under clause (c) of sub-section (5) shall also ensure that the permanent account number or the Aadhaar number, as the case may be, has been duly quoted.

It is also proposed to insert a new sub-section (6A) to provide that every person entering into such transaction, as may be prescribed, shall quote his permanent account number or Aadhaar number, as the case may be, in the documents pertaining to such transactions and also authenticate such permanent account number or Aadhaar number, as the case may be, in such manner as may be prescribed.

It is also proposed to insert a new sub-section (6B) to provide that every person receiving any documents relating to the transactions prescribed under sub-section (6A), shall ensure that permanent account number or Aadhaar number, as the case may be, has been duly quoted in the documents and also ensure that such permanent account number or Aadhaar number is authenticated in such manner as may be prescribed.

It is also proposed to empower the Board to prescribe by rules the categories of transactions in respect of which Aadhaar number shall be quoted by every person in documents pertaining to such transactions and the manner in which the Aadhaar number shall be quoted.

It is also proposed to define the expressions “Aadhaar number” and “authentication” in the Explanation to the said section.

These amendments will take effect from 1st September, 2019

Clauses 64 of Finance Bill 2019

Amendment of section 272B.

64. In section 272B of the Income-tax Act, with effect from the 1st day of September, 2019,–– (a) in sub-section (2),––

(i) for the words “permanent account number”, the words “permanent account number or Aadhaar number, as the case may be,” shall be substituted;

(ii) for the words “ten thousand rupees”, the words “ten thousand rupees for each such default” shall be substituted;

(b) after sub-section (2), the following sub-sections shall be inserted, namely:––

“(2A) If a person, who is required to quote his permanent account number or Aadhaar number, as the case may be, in documents referred to in sub-section (6A) of section 139A or authenticate such number in accordance with the provisions of the said sub-section, fails to do so, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees for each such default.

(2B) If a person, who is required to ensure that the permanent account number or the Aadhaar number, as the case may be, has been,––

(i) duly quoted in the documents relating to transactions referred to in clause (c) of sub-section (5) or in sub-section (6A) of section 139A; or

(ii) duly authenticated in respect of transactions referred to under sub-section (6A) of that section,

fails to do so, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees for each such default.”;

(c) in sub-section (3), for the word, brackets and figure “sub-section (2)”, the words, brackets, figures and letters “sub-section (2) or sub-section (2A) or sub-section (2B)” shall be substituted.

 

Explanation of Clauses 64 of Finance Bill 2019

Clause 64 of the Bill seeks to amend section 272B of the Incometax Act relating to penalty for failure to comply with the provisions of section 139A.

The said section, inter alia, provides for penalty for failure to comply with the provisions of section 139A.

It is proposed to suitably amend the sub-section (2) of the said section, so that penalty may also be levied on false quoting or non-intimation of Aadhaar number.

It is further proposed that penalty of ten thousand rupees shall be levied for each such default.

It is also proposed to insert a new sub-section (2A) to provide that if a person, who is required to quote and also authenticate his permanent account number or Aadhaar number, as the case may be, in accordance with the provisions of section (6A), fails to do so, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees for each such default.

It is also proposed to insert a new sub-section (2B) to provide that if a person who is required to ensure that the permanent account number or the Aadhaar number, as the case may be, quote in the documents relating to transaction prescribed in clause (c) of sub-section (5) of section 139A or authenticate such number in respect of transactions prescribed under sub-section (6A) of that section, fails to do so, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees for each such default.

It is also proposed that before passing a penalty order under the proposed new sub-section (2A) and sub-section (2B), a person shall be heard. These amendments will take effect from 1st September, 2019.

 

 

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