A major scam involving the misuse of PAN cards is reportedly spreading across India, according to a June 18 article in The Times of India by Lubna Kably. Several cases have surfaced, including one involving a senior citizen and homemaker from Mumbai. She had to escalate her issue to the Income-tax Appellate Tribunal (ITAT) after a tax officer accused her of selling a property worth Rs 1.3 crore in 2010-11 and treating it as her income.
Due to her illiteracy and battle with cancer, she was unable to respond to the notices. Her counsel argued at a recent ITAT hearing that her PAN card had been misused in the property registration. The tribunal found that the tax officer had not conducted an independent investigation, such as verifying details with the property registrar and the buyer. It ordered the Income-tax department to gather complete information from the registrar and ensure the woman receives a fair hearing.
Numerous other PAN card frauds reported
This PAN card case is not isolated. Numerous instances of PAN misuse have been reported across India. For example, Usha Soni from Betul, Madhya Pradesh, received an I-T notice for Rs 7.5 crore ten years after her death. Similarly, Nand Lal, a small shopkeeper in Rajasthan, filed a police complaint after receiving an I-T notice for Rs 12.2 crore. Fraudsters often target vulnerable groups, including the deceased, senior citizens, farmers, and students. Chartered accountant Ketan Vajani noted that PAN misuse could lead to significant difficulties, including substantial demands on individuals for transactions unrelated to them. He emphasized the need to keep PAN details confidential, although they are frequently shared for various purposes.
The Central Board of Direct Taxes (CBDT) advised individuals to avoid sharing their PAN information unless required by government guidelines. The PAN database currently exceeds 70 crore entries, and linking PAN with Aadhaar was intended to prevent misuse. The CBDT suggested filing a police complaint in cases of suspected PAN misuse.
Tax expert Ameet Patel commented on the ITAT order, highlighting the issue of the Income-tax department’s reliance on information from various agencies without independent verification. He stressed the importance for taxpayers to regularly check their Annual Information Statement (AIS), which includes data from banks and property registrars on transactions like bank interest, dividends, and property sales. Patel advised immediate feedback in the AIS system upon finding a wrong entry, and filing a police report if the mistake isn’t corrected.
Vajani suggested that filing a police complaint could protect taxpayers if unauthorized transactions are added during assessments. He also proposed that the Income-tax department should provide an online feature for reporting PAN card misuse.
The CBDT explained that the Income-tax department cannot act on a confirmed transaction by a reporting entity unless the PAN card holder files a police complaint and it is investigated. PANs are not deactivated upon the holder’s death to allow the department to complete any pending proceedings. Family members or legal heirs must inform the assessing officer of the death and provide the PAN card and death certificate. Patel recommended that the system be improved by automatically notifying the Income-tax department upon the issuance of a death certificate, making it easier to prevent unauthorized transactions against the deceased’s PAN.
