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Fake PAN numbers !

Imagine going to the Income Tax Department to file your tax return and the assessing officer in turn hands you a penalty notice of Rs 10,000 for holding a fraudulent PAN (permanent account number) card!

You are shocked to discover that although you have a valid PAN card, the departmental database shows that your PAN card has been allotted to someone else! How is that possible?

Well, anything can happen when outsourcing is treated as the ultimate panacea for all the problems of income tax computerisation and public dealing.

How it is being done by some unscrupulous elements -- so far limited to one or two places only -- is illustrated here.

The Central Board of Direct Taxes had outsourced the PAN allotment work to the UTI from July 1, 2003. But the department also continued to allot PAN till September 2003 only to clear the backlog of PAN applications.

Instructions were issued to stop PAN allotment from October 1. But these instructions were ignored and the practice continued till December 31 until it was brought to the notice of seniors and the authorities started wielding the stick.

Meanwhile, like during the previous fiscal year, the data entry job was once again outsourced to local vendors at the rate of Rs 1.25 per return as the new computers had not arrived. It was for pure data entry work and the assessing officers were to do processing on the AST module. But since most assessing officers are not comfortable with computer-based processing, they asked the vendors to do the same for them at an unofficial rate of Rs 2.25 per return!

The balance was managed in a predictable manner. Sources indicate that this is where the local vendors began taking undue advantage of their position. How?

An assessee X approaches the data entry operator of the vendor for issue of a new PAN card. The vendor obliges by demanding a sum of Rs 5,000. He has a CD of the PAN directory ( i.e. details of the PAN numbers issued till date). From the CD he selects a PAN number where the character standing for surname matches with the surname of the new applicant. For instance, if the applicant's surname is Mishra then the vendor selects a PAN number where the concerned character is M and has been allotted to, say, Mohanty. He punches the PAN number on AIS module and the screen flashes the complete details of Mohanty.

He then modifies the link. This link has been given only to modify the mistakes in a PAN card like typographical errors, wrong addresses, etc. But the vendor uses this to modify link to erase all details of the original PAN holder Mohanty from the database. He then punches the new details of Mishra and confirms the entry.

This is accepted by the server at Delhi and a new PAN card is issued from the computer centre where the security is zero. When Mohanty goes to file his return he is shocked to find that his details are not there in the database and his return cannot be processed.

Fortunately, such an incident has come to notice at one or two places so far, but the CBDT needs to investigate the issue at an all-India level so that it is able to safeguard its database from such poaching and misuse. Any lackadaisical approach at this time would certainly do long-term damage not only to the departmental database but also the trust of the taxpayers in the department.

Another aspect which the CBDT needs to probe is how many user IDs have been leaked out to these local vendors by the assessing officers and whether the same have also been used to tamper with other sensitive information like TDS credit of an assessee or quantum of investment to generate refund.

Another implication of such a fraudulent practice is that if a genuine taxpayer moves to another city his PAN records would not be shifted as they don't exist in the departmental records.

To know the exact quantum and severity of this misuse which has been reported to Taxindiaonline by reliable sources, the DIT (S) can check it out in Delhi itself by going through the list of modifications made in the recent months. It is indeed urgent and the board should certainly find out the dimension of the problem.