Loopholes in PAN card procedure led to fraud

The Rs 14 crore fraud using the electronic clearing system (ECS) of the income tax (I-T) department has once again highlighted the ease with which duplicate or forged Permanent Account Number (PAN) cards can be made, reports Manish Pachouly.

The Rs 14 crore fraud using the electronic clearing system (ECS) of the income tax (I-T) department has once again highlighted the ease with which duplicate or forged Permanent Account Number (PAN) cards can be made.

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The suspected hackers not only made PAN cards using forged details, but also got them allotted under the central charge of the I-T department that only handles cases of assessees under investigation. The fraudsters used the login and password of the section’s assessing officer in the section.

The department outsources the PAN card making process to the Unit Trust of India and the National Securities Depository Limited.

Officials said that in order to issue a PAN card, one has to mention a respective jurisdictional assessing officer’s (AO) code in the application form. In this case, the AO code from central charge was used. “If the system was foolproof, the department would have noticed it as central charge handles only specific cases, and the fraud could have been detected at an initial stage,” the official said.

After issuing the PAN cards, the fraudsters hacked the system again and filed returns showing large refunds. Around 50 PAN cards belonging to people not falling under tax bracket were used for the fraud.

Officials said that addrss verification is not done before issuing PAN cards and therefore by twisting one name in different ways, more than one PAN card can be made for the same address and photographs.

S. S. N. Moorthy, Chairman of Central Board of Direct Taxes (CBDT), which governs the I-T department across India, “We are verifying the system and it will be taken care of.”