Every year, one million PAN holders were found to have not responded to I-T notices, many of which were returned as un-served, the government said. Field verifications found that in a large number of cases, PAN holders were untraceable.

The mandatory linking of the permanent account number (PAN) with Aadhaar was meant to protect genuine tax-payers and check the misuse of PAN in high-value transactions, UIDAI told the Supreme Court on Tuesday, April 10.

The Unique Identification Authority, which is tasked with issuing the 12-digit biometric identity number, sought to dispel fears that enforcement agencies will harass citizens.

“Requiring Aadhaar is akin to screening genuine persons from the dishonest ones or vice versa,” UIDAI counsel additional solicitor general Tushar Mehta told a five-judge Constitution bench led by Chief Justice Dipak Misra.

The court is hearing a bunch of petitions that have challenged Aadhaar, saying it breaches privacy, data collected could be used for mass surveillance and people are being denied benefits for not possessing the ID.

The amended income-tax (I-T) law that calls for linking PAN with Aadhaar was declared constitutionally valid, so it was incorrect for the petitioners to say the procedure violated their right to life, liberty and privacy, Mehta said.

By making Aadhaar a must for I-T returns or opening a bank account, the government was assuming that people were criminals, the petitioners have said. They were referring to an amendment that says persons not complying with the provision could be prosecuted under the prevention of money laundering act.

PAN is a 10-digit alphanumeric numeric number issued by the I-T department.

Every year, one million PAN holders were found to have not responded to I-T notices, many of which were returned as un-served, Mehta said.

Field verifications found that in a large number of cases, PAN holders were untraceable. There were also several instances of people denying making a transaction done using their PAN.

“There is a need to strengthen PAN by linking it with Aadhaar/biometric information to prevent the use of wrong PAN for high-value transactions,” the ASG said.

“Even assuming without admitting that requirement of Aadhaar affects the right to privacy in some manner, it is a reasonable restriction which is permissible under the Constitution and does not presume any guilt or criminality.” While 958 lakh PANs were issued till March 2010, only 340.9 lakh I-T returned were filed in the same period, Mehta said, citing CAG figures.