PAN-India fraud? Scamsters target dead, farmers, women

MUMBAI: A Mumbai-based homemaker and senior citizen had to litigate up to the Income-tax Appellate Tribunal (ITAT) level over alleged misuse of her PAN after a tax officer held that she had sold immovable property of Rs 1.3 crore in 2010-11 and treated this as her income.
Illiterate and a cancer patient, the woman failed to respond to I-T notices. At a recent hearing before the ITAT, her counsel submitted that her PAN was misused in the property registration.The tribunal noted that the I-T officer had not conducted an independent inquiry, such as seeking details from the registrar of the property and the buyer. It ordered the I-T department to seek complete information from the registrar and provide the woman with a fair hearing.

This was not an isolated incident. Cases have been reported across India of misuse of PAN-be it Usha Soni in Betul, MP, to whom an I-T notice of Rs 7.5 crore was issued a decade after her death, or Nand Lal, a small shopkeeper in Rajasthan, who filed a police complaint after receiving an I-T notice of Rs 12.2 crore. The dead, senior citizens, farmers and students are easy targets for PAN fraudsters.



"Misuse of the PAN by unscrupulous elements can cause lots of difficulties, including huge demands being raised on an individual due to additions to his/her income during assessment for transactions that do not pertain to the PAN holder. While the highest secrecy must be maintained of one's PAN, the reality is that details are freely shared for various purposes," said Ketan Vajani, chartered accountant.
"Individuals should restrain from sharing their PAN information/PAN card where it is not mandated by the government's guidelines or is in public domain," Central Board of Direct Taxes (CBDT) said in an email to a query by TOI. "The PAN database at present is more than 70 crores. Linking with Aadhaar was brought in largely to prevent/stop misuse of PAN. However, if there are cases of suspected misuse of PAN, it is advised that a complaint may be filed with the police."
Against the backdrop of the ITAT order, Ameet Patel, tax partner at Manohar Chowdhry & Associates, said: "The issue of the I-T department relying completely on information filed by various agencies and initiating action against the taxpayers is a serious issue and needs a lot of rethinking by the department. It has now come to a stage that every taxpayer has to necessarily check his/her annual information statement (AIS) every few weeks."
AIS provides wide-ranging information received from reporting entities (banks and property registrars), such as bank interest, dividend, purchase and sale transactions of securities, or immovable properties.
"The moment someone finds a wrong entry in the AIS, it would be best to provide feedback in the AIS system immediately and point out the mistake. If the mistake is not rectified, the need to file an FIR with police arises," said Patel.


According to Vajani, a police complaint could also act as a shield if during assessment, additions are made for transactions that do not belong to the PAN holder. "It would be a taxpayer friendly move for the I-T department to provide a tab on its website to report any misuse," he said.
CBDT, in its reply, explained that when the reporting entity confirms the transaction, unless the PAN holder reports the matter to police and the case is investigated, no consequent action can be taken by the I-T department.
It also said that a PAN is not deactivated in the event of death of the holder so as to enable the I-T department to initiate or complete pending I-T proceedings, if any. However, the family members/legal heirs of such a PAN holder need to intimate the death to the jurisdictional assessing officer (whose details are available on the e-portal), along with copies of the PAN card and the death certificate, post which the officer marks the death event against the PAN.
Patel suggested an improvement in the system. "I feel that once a death certificate is issued by the local authorities, there should be an automatic intimation to the I-T department, which, in turn, must immediately flag that particular PAN as being that of a deceased. No high value transactions should then be permitted against that PAN."