A recent case brought to light the challenges faced by Indian taxpayers in dealing with the misuse of their Permanent Account Number (PAN) details. A Mumbai-based homemaker and senior citizen found herself in a complex situation after receiving a tax notice over a property sale of ₹1.3 crore, allegedly due to the misuse of her PAN details. This scenario escalated to a case at the Income-tax Appellate Tribunal (ITAT) level, as reported in a recent article.
The individual in question, who was illiterate and battling cancer, failed to respond to the initial notices from the Income Tax (I-T) department. The tribunal highlighted the lack of an independent inquiry by the I-T officer, emphasizing the need for thorough investigation involving relevant entities such as property registrars and buyers.
This incident is not an isolated one, with similar cases emerging across the country. Usha Soni from Betul, Madhya Pradesh, faced an IT notice of ₹7.5 crore a decade after her demise. Additionally, Nand Lal, a small shopkeeper in Rajasthan, lodged a police complaint upon receiving an IT notice of ₹12.2 crore.
Experts weighed in on the matter, expressing concerns about the I-T department’s heavy reliance on information provided by external sources, leading to actions against taxpayers without adequate verification. Ameet Patel, a tax partner at Manohar Chowdhry & Associates, stressed the need for a reevaluation of the current approach, emphasizing the importance of taxpayers regularly reviewing their Annual Information Statement (AIS) for discrepancies.
The AIS serves as a crucial source of information from reporting entities such as banks and property registrars, encompassing details like bank interest, dividends, and property transactions. Patel advised individuals to promptly address any inaccuracies in the AIS and, if necessary, escalate the issue to the authorities.
In response to these challenges, the Central Board of Direct Taxes (CBDT) emphasized the significance of safeguarding PAN information and encouraged individuals to refrain from sharing their PAN card details unnecessarily. Additionally, the CBDT underlined the role of Aadhaar linkage in preventing PAN misuse and recommended filing complaints with the police in cases of suspected misuse.
Ketan Vajani, a chartered accountant, underscored the potential protective role of filing a police complaint, especially in cases where unauthorized transactions are linked to a PAN. Vajani also suggested the implementation of a reporting mechanism on the I-T department’s website, enabling individuals to report instances of PAN misuse.
Addressing concerns regarding PAN holders who have passed away, the CBDT clarified that the PAN is not deactivated upon the holder’s demise. Family members or legal heirs are advised to notify the jurisdictional assessing officer about the death, accompanied by the necessary documentation.
These incidents highlight the need for a robust framework to protect taxpayers from the misuse of their PAN details. As the authorities and experts emphasize vigilance and prompt action, it becomes imperative for both the I-T department and taxpayers to work collaboratively towards ensuring the integrity of the tax system and the protection of individuals’ financial identities.