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Deactivated PANs Used For Stock Market Trading and Shell Firms


Last month as many as 1.1 million PAN or Permanent Account Numbers had been deactivated by the tax department. Of these several have been found to be issued in duplicate and were being used for the purpose of opening demat and trading account or to operate a shell firm.

Deactivated PANs Used For Stock Market Trading and Shell Firms

To the surprise of Income Tax Department, an individual held 5-7 PANs with a slight difference in his name. Mainly these errant individuals are discovered to be small or mid-sized brokers or sub-brokers or their clients and are found to have resorted to tax evasion.

After the demonetization, the department required quoting of PAN for deposits of over Rs. 2 lakhs in the bank. The scouting for black money and other errant practices in the system is checked by use of data analytics in which all information including addresses, mobile number etc was accounted for and noted to figure out the relationship among several PANs.

Further, the dept. is of the view that individuals resort to tax evasion by quoting one PAN for making investments in financial instruments and use the other for filing tax return.

To further its crack down on black money and other illicit practices, the department is matching its database with that of other financial institutions, KYC details, TDS and other accounts to get a comprehensive detail of taxpayer.

One of the senior tax official said, "Through this we have clustered PAN-linked demonetisation data, using identified relationships as well as common addresses, email, and respective bank branch,"

Also, SEBI is also planning to identify investors in the capital market through their Aadhaar numbers after the government's move to make the aadhaar ID mandatory for several transactions that include filing ITR, obtaining new PAN and it shall also become mandatory to quote Aadhaar number for opening bank account beginning next year.


The second list of identified and deactivated PANs shall be released shortly.

Story first published: Wednesday, August 16, 2017, 11:20 [IST]
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