Permanent Account Number [Section 139A And Rule 114]

What is PAN?

• Permanent Account Number (PAN) is a unique ten-digit alphanumeric identifier issued by the Income Tax Department of India for tax and financial identification purposes.
• PAN remains valid for a lifetime unless formally canceled.

Legal Provisions

Section 139A – Income Tax Act, 1961

• Authorizes the Central Government to allot PAN to any “person” (individual, company, firm, trust, etc.) for identification relevant to tax administration.
• Specifies the categories of people & entities required to obtain PAN and the requirement to quote PAN in specified documents/transactions.
• PAN must be quoted in tax returns, challans, TDS certificates/returns, and specified high-value transactions.

Rule 114 – Income Tax Rules, 1962

• Lays down the procedure and form (Form 49A for Indian citizens/entities, Form 49AA for foreign citizens/entities).
• Specifies documents required as proof of identity (POI), proof of address (POA), and proof of date of birth (Individuals/HUF).
• Mandates online and offline procedures as well as digital transmission standards for safe processing.

Who Must Apply for PAN?

CATEGORY	OBLIGATION TO APPLY FOR PAN
Individuals	If total income exceeds basic exemption limit OR required to file return
Businesses/Firms	If gross receipts/sales/turnover likely to exceed ₹5 lakh in any year
Persons Requiring PAN	For high-value transactions (prescribed under Rule 114B)
Entities (Trusts, LLPs, Companies, HUF, etc.)	Mandatory, regardless of income
Charitable Trusts	Required, if claiming exemption u/s 139(4A)

How to Apply

• Form 49A:For Indian citizens/entities.
• Form 49AA:For foreign citizens/entities or companies registered outside India.
• Applications can be submitted online (via Protean/NSDL or UTIITSL portals) or physically at designated centres.

Required Documents (for Individuals):

• Proof of Identity (POI): Aadhaar Card, Passport, Voter ID, Driving License, etc.
• Proof of Address (POA): Utility bills, Property documents, Passport, etc.
• Proof of Date of Birth: Birth Certificate, Passport, Matriculation certificate, etc.
• For minors, parent/guardian’s documents are used.

For Companies/Firms/Trusts:

• Certificate of registration, partnership deed, or trust deed as applicable.
• Details of Karta (HUF) or authorized signatory must be furnished.

Where PAN Must Be Quoted (Key Transactions)

TRANSACTION TYPE	THRESHOLD/REQUIREMENT
Sale/purchase of motor vehicle (except two-wheelers)	All transactions
Opening a bank or demat account	All transactions
High-value hotel/restaurant payments	Cash payment >₹50,000 at one time
Payments for foreign travel or currency	Cash payment >₹50,000 at one time
Purchase of mutual funds, bonds, debentures, RBI bonds, insurance	Amount >₹50,000
Time deposit with banks/NBFC/Post Office, or purchase of pre-paid cards	Amount >₹50,000 or >₹5 lakh/year
Sale/purchase of immovable property	Value >₹10 lakh or as per stamp value
Sale/purchase of goods/services (other than above)	Amount >₹2 lakh per transaction

• Non-residents, government bodies, or certain exempted transactions may not require PAN, but otherwise, PAN is mandatory in the above cases

Application Procedure (Summarized)

1. Choose Form:49A (Indians) or 49AA (foreigners).
2. Fill details:Name, parent’s name, date of birth/incorporation, address, AO code, etc.
3. Attach proofs:Identity, address, and date of birth for individuals; appropriate documents for other entities
4. Submit Application:Online portal or at a PAN Service Centre.
5. Verification:Documents, payment of fee.
6. Allotment:PAN issued via card (physical or e-form).

Additional Provisions

• Individuals/entities cannot possess more than one PAN. Having duplicate PANs is illegal.
• Quoting PAN in certain financial transactions is compulsory; penalties apply for non-compliance (₹10,000 u/s 272B).
• PAN is required to be linked with Aadhaar as per Section 139AA.

1.  Power Delegated to The Central Government to Notify Class or Classes of Persons for Whom It Will Be Obligatory to Apply for Permanent Account Number (PAN) [Section 139A(1A)]

Under Section 139A(1A) of the Income Tax Act, 1961, the Central Government is empowered to notify specific classes of persons who are obligated to apply for a Permanent Account Number (PAN). This provision aims to expand PAN’s use as a universal identifier for financial and tax-related transactions across various government departments, including customs, excise, and foreign trade. Below are the key details:

Classes of Persons Notified by the Central Government

1. Exporters and Importers
   • Defined under Sections 2(20) and 2(26) of the Customs Act, 1962.
   • Required to obtain an Importer-Exporter Code (IEC) under the Foreign Trade (Development and Regulation) Act, 1992.
   • Must apply for PAN before making any import/export transactions .
2. Assessees under Central Excise Rules
   • Persons defined under Rule 2(3) of the Central Excise Rules, 1944.
   • Includes traders issuing CENVAT invoices requiring registration under excise laws.
   • Must apply before seeking excise registration.
3. Service Tax Assessees
   • Persons liable to pay/service tax must apply for PAN before registering under service tax laws.
4. Sales Tax Registrants
   • Persons registered under:
     • The Central Sales Tax Act, 1956, or
     • State/UT general sales tax laws.
   • Must apply before applying for sales tax registration.

Time Limits for PAN Application

• Existing entities(falling under the notified classes at the time of notification) must apply within 15–30 days of the notification’s publication.
• Newly qualifying personsmust apply:
  • Beforemaking an import/export (for traders).
  • Beforeapplying for excise/service tax/sales tax registration

Key Provisions of Section 139A(1A)

1. Delegated Authority
   • The Central Government can specify categories of individuals/entities who must apply for PAN, even if their income is below the taxable threshold .
2. Targeted Groups
   • Typically includes:
     • Exporters/Importersrequiring an Importer-Exporter Code (IEC).
     • Excise/Sales Tax registrants(e.g., businesses liable under Central Excise or State VAT laws).
     • Service Tax assesseesand professionals like CAs/CSs.

3. Purpose
   • Facilitates cross-departmental tracking (e.g., customs, GST, income tax) by linking PAN to other registrations.
4. Compliance Timeline
   • Notified persons must apply for PAN:
     • Within 30 daysof the government’s notification (for existing entities).
     • Before commencing operations(for new entities).

5. Alignment with New Income Tax Bill 2025
   • The upcoming Income Tax Act 2025renumbers this provision as Section 262 but retains its essence.

2.  Aadhaar Number to Be Intimated [Rule 114(5)]

Under Rule 114(5) of the Income-tax Rules, 1962, individuals who were allotted a Permanent Account Number (PAN) as of July 1, 2017, and are required to intimate their Aadhaar number under Section 139AA(2) of the Income-tax Act, must submit their Aadhaar details to the Income Tax Department. Here’s a detailed breakdown:

Key Provisions of Rule 114(5)

1. Applicability
   • Applies to existing PAN holdersas of July 1, 2017, who are mandated to link their Aadhaar under Section 139AA(2) .
2. Authority for Intimation
   • Aadhaar details must be submitted to:
     • Principal Director General of Income-tax (Systems),
     • Director General of Income-tax (Systems), or
     • Any authorized officialdesignated by these authorities .

3. Methods of Intimation
   • Online: Via the e-filing portal (incometaxindiaefiling.gov.in).
   • SMS: Send a message in the format UIDPAN <Aadhaar> <PAN>to 567678 or 56161 (free service, SMS charges apply) .
   • PAN Service Centers: Submit Form Annexure-Ialong with copies of PAN and Aadhaar cards at designated centers (fees may apply) .
4. Verification Process
   • Aadhaar details are authenticated via UIDAI(demographic, biometric, OTP, or e-KYC).
   • Applications may be rejected if mismatches are found between PAN and Aadhaar data .
5. Consequences of Non-Compliance
   • PAN may become inoperativeif Aadhaar is not linked by the deadline (previously March 31, 2022, now extended for specific cases) .
   • Penalties apply:
     • ₹500if linked within 3 months of the deadline.
     • ₹1,000for delays beyond 3 months .

Recent Updates (2025)

• For PANs issued based on Aadhaar Enrolment ID(pre-October 1, 2024), the actual Aadhaar number must be submitted by December 31, 2025, under Rule 114(5AA)

3.   PAN to Be Quoted in Certain Cases [Section 139A (5)]

Under Section 139A(5) of the Income Tax Act, 1961, quoting a Permanent Account Number (PAN) is mandatory in specific financial transactions and documents to ensure tax compliance and transparency. Below is a detailed breakdown of the provisions:

Key Provisions of Section 139A(5)

1. Mandatory Quoting of PAN
   Every person must quote their PAN in:
   • Income tax returnsand correspondence with tax authorities.
   • Challansfor tax, interest, or penalty payments.
   • Documentsrelated to prescribed high-value transactions (as per Rule 114B).
2. Transactions Requiring PAN (Rule 114B)
   PAN must be quoted in the following transactions (non-exhaustive list):

TRANSACTION	THRESHOLD
Sale/purchase of motor vehicles (excluding two-wheelers)	All transactions
Opening a bank account (excluding Basic Savings Accounts)	All transactions
Applying for credit/debit cards	All transactions
Opening a Demat account	All transactions
Hotel/restaurant payments (cash)	Exceeding ₹50,000 per bill
Foreign travel/currency purchase (cash)	Exceeding ₹50,000 per transaction
Mutual fund investments	Exceeding ₹50,000
Purchase of bonds/debentures	Exceeding ₹50,000
Cash deposits in banks/post offices	Exceeding ₹50,000/day or ₹2.5L (2016 window)
Sale/purchase of immovable property	Exceeding ₹10L or stamp duty value
Sale/purchase of goods/services (not listed above)	Exceeding ₹2L per transaction.

3. Exceptions
   • Minorswithout taxable income may quote a parent/guardian’s PAN.
   • Non-residents(under Section 2(30)) are exempt for certain transactions (e.g., hotel bills) but must quote PAN for investments/property deals.
   • Government entitiesand consular offices are exempt.
4. Alternatives for Non-PAN Holders
   • Submit Form 60(declaration with transaction details) if PAN is unavailable.
5. Penalties for Non-Compliance
   • ₹10,000per default under Section 272B for:
     • Failing to quote PAN.
     • Providing false PAN.
   • Transactions may be refused if PAN/Form 60 is not provided.

Purpose of PAN Quoting

• Tracks high-value transactions to prevent tax evasion.
• Links financial activities across banking, investments, and property deals for better tax oversight

4.   Quoting of PAN in Documents Pertaining to Such Transactions as May Be Prescribed by The Board [Section 139A(5)(C)]

Section 139A(5)(c) of the Income Tax Act, 1961, requires every person to quote their Permanent Account Number (PAN) in all documents pertaining to certain transactions as may be prescribed by the Central Board of Direct Taxes (CBDT). The objective is to ensure transparency and facilitate tracking of high-value and potentially taxable transactions.

The specific transactions in which quoting PAN is mandatory are prescribed in Rule 114B of the Income Tax Rules. Both the person engaging in the transaction (such as buyer or investor) and the person receiving the document (such as seller or banker) are required to ensure the PAN is quoted or to obtain a declaration in Form 60 if PAN is not held.

Key Transactions Where Quoting PAN is Compulsory (Rule 114B)

Below is a non-exhaustive list of principal transactions where PAN must be quoted:

• Sale or purchase of immovable propertyvalued at ₹10 lakh or more (or valued by stamp valuation authority at ₹10 lakh or more)
• Purchase or sale of a motor vehicle(excluding two-wheelers)
• Opening of a bank or demat account(other than basic savings deposit account)
• Fixed depositswith banks, NBFCs, post offices, or similar institutions of amount exceeding ₹50,000 at a time or aggregating to more than ₹5 lakh in a financial year
• Credit card or debit card applicationwith a banking company or cooperative bank
• Cash payment exceeding ₹50,000to hotels/restaurants, or for foreign travel (including purchase of foreign currency)
• Purchase of bank drafts, pay orders, or banker’s chequesfor cash in excess of ₹50,000 in a day
• Sale or purchase of securities(other than shares) exceeding ₹1 lakh per transaction
• Opening a demat account
• Payment in connection with the purchase of mutual fund units, bonds, or sharesexceeding ₹50,000
• Sale or purchase of goods or servicesof any nature other than those specified above, for cash exceeding ₹2 lakh per transaction

(For the authoritative and current list, refer directly to Rule 114B of the Income Tax Rules.)

Responsibilities

• Person entering into the transaction:Must quote PAN in the relevant document.
• Person receiving the document:Must ensure that PAN has been correctly quoted; if not, must obtain a declaration in Form 60 (from individuals who do not hold PAN).

Legal Framework

• Section 139A(5)(c):Mandates quoting PAN in documents linked to transactions prescribed by the CBDT, as outlined above.
• Rule 114B:Specifies the exact nature and monetary thresholds of transactions requiring PAN quoting.
• Section 139A(6):Mandates the recipient/acceptor of relevant documents to ensure compliance with PAN quoting.

Exceptions

Rule 114C lists certain persons (e.g., those with only agricultural income furnishing Form 61, non-residents for specific transactions) where these requirements may not apply

5.  Duty of The Person Receiving Any Document Relating to The Transactions Where Quoting of PAN Is Compulsory [Section 139A (6)]

Under Section 139A (6) of the Income Tax Act, 1961, every person who receives any document relating to a transaction where quoting of PAN is compulsory (as prescribed under Section 139A(5)(c) and Rule 114B) has a specific legal duty:

Such person must ensure that the Permanent Account Number (PAN), General Index Register (GIR) Number, or Aadhaar number (where permitted) has been duly quoted in the document. This obligation also extends to verifying the correctness of the PAN or other identifiers quoted.

Explanation of Duty

Who is Responsible?

• The person receiving the document—typically the recipient, buyer, or acceptorof a document linked to a prescribed transaction­—must ensure compliance.

What Must Be Ensured?

• That the document quotes the PAN/GIR/Aadhaar numberas required.
• If the other party does not have a PAN, the recipient must obtain a declaration in Form 60.
• The obligation is on the recipient to actively check and ensure the accuracy/completeness of the quoted information.

Practical Application

For example:

• If a bank accepts a cash deposit above the specified limit, the bank (as recipient) must ensure PAN is quoted on the deposit slip.
• If a property registrar processes a sale deed above ₹10 lakh, they must ensure PAN is duly quoted by both buyer and seller in the document.

Legal Reference

“Every person receiving any document relating to a transaction prescribed under clause (c) of sub-section (5) shall ensure that the Permanent Account Number or the General Index Register Number or the Aadhaar number, as the case may be, has been duly quoted in the document.” — Section 139A(6).

Consequences of Non-Compliance

Failure to comply makes the recipient liable to penalty under Section 272B of the Act.

6.  Intimation of PAN in Certain Cases and Obligation of The Person to Whom the PAN is Intimated [Section 139A(5)]

Section 139A(5) of the Income Tax Act, 1961, mandates the intimation of PAN in specific financial transactions and imposes obligations on the entities receiving such PAN details.

1. When PAN Must Be Intimated

A person must furnish their PAN to the concerned entity in the following cases:

• High-value transactions(as prescribed under Rule 114B).
• Opening bank accounts(excluding Basic Savings Accounts).
• Purchasing/selling immovable property(above ₹10 lakh).
• Investing in securities, mutual funds, or debentures(above ₹50,000).
• Applying for credit/debit cards.
• Making cash payments(e.g., hotel bills above ₹50,000, foreign travel, etc.).
• Any other transaction notified by the government.

2. Obligations of the Entity Receiving PAN

The person/entity collecting PAN must:

• Verify the PAN(via Income Tax e-filing portal or other prescribed methods).
• Maintain recordsof transactions linked to PAN for at least 7 years.
• Report to tax authoritiesif discrepancies or fraudulent use is detected.
• Refuse transactionsif PAN is not provided (unless exempted).

3. Exceptions

• Non-residents(without PAN) may provide alternative documents (e.g., passport).
• Minorsmay quote a parent/guardian’s PAN.
• Small transactions(below prescribed limits) do not require PAN.

4. Penalties for Non-Compliance

• For Individuals:
  • ₹10,000 penalty under Section 272Bfor not quoting PAN.
• For Entities:
  • Penalty for failing to verify/maintain PAN records.
  • Possible prosecution for aiding tax evasion.

7.  Inter-Changeability of PAN & Aadhaar And the Mandatory Requirements [Section 139A(5E)].

Here’s a detailed breakdown of the interchangeability of PAN and Aadhaar and the mandatory quoting requirements under Section 139A(5E) (effective September 1, 2019) and Rules 114(1A), (1B), and (1C) of the Income Tax Act, 1961:

1. Interchangeability of PAN and Aadhaar [Section 139A(5E)]

• Purpose: To streamline tax compliance and expand the tax base by allowing Aadhaar as an alternative to PAN in specified cases.
• Key Provisions:
  • Aadhaar in Lieu of PAN:
    • Individuals without PANbut with Aadhaar can quote Aadhaar instead, and a PAN will be auto-allotted using UIDAI data.
    • Individuals with PAN(and linked Aadhaar) may use Aadhaar instead of PAN in transactions.
  • Conditions:
    • Aadhaar must be linked to PANfor interchangeability; unlinked PAN becomes inoperative.
    • NRIs and non-citizens are exempt unless they qualify as residents under tax laws.

2. Mandatory Quoting in Prescribed Transactions [Rule 114(1A)-(1C)]

• Scope: Applies to high-value transactions where PAN/Aadhaar is mandatory under Rule 114B(e.g., property deals, bank accounts, investments).
• Obligations:
  • For Individuals: Must quote PAN/Aadhaar in documents related to prescribed transactions (e.g., Form 26QB for property TDS).
  • For Entities Receiving Documents: Must verify and authenticate the quoted PAN/Aadhaar.
• Penalties:
  • ₹10,000per default for failure to quote/authenticate (Section 272B).
  • Higher TDS/TCS rates apply if PAN/Aadhaar is not provided.

3. Key Use Cases for Interchangeability

1. Bank Accounts: Aadhaar can be quoted for new accounts, but PAN may still be required for KYC.
2. Tax Deductions (Form 15G/15H): Aadhaar can replace PAN to avoid higher TDS on interest income.
3. HRA Claims: Landlord’s Aadhaar can be submitted if PAN is unavailable.
4. Property Transactions: Aadhaar can be used in Form 26QB for TDS on property sales.
5. Investment Declarations: Employees can submit Aadhaar in Form 12BB to employers.

4. Consequences of Non-Compliance

• Inoperative PAN: Unlinked PANs cannot be quoted, leading to:
  • Inability to file ITRs or claim refunds.
  • Higher TDS/TCS deductions.
• Late Fees: ₹1,000 for delayed linking (Section 234H).

5. Recent Updates (2024–2025)

• Auto-allotment of PAN: For Aadhaar holders filing returns, PAN is auto-generated without separate application.
• Deadline for Aadhaar Enrolment ID Holders: PANs issued pre-October 2024 must submit actual Aadhaar by December 31, 2025.

Summary of Rules

PROVISION	KEY REQUIREMENT	PENALTY
Section 139A(5E)	Aadhaar can replace PAN if linked or if PAN is unavailable	PAN becomes inoperative if unlinked
Rule 114(1A)-(1C)	Entities must verify PAN/Aadhaar in prescribed transactions	₹10,000 per default
Rule 114B	Lists transactions requiring PAN/Aadhaar (e.g., property, investments, bank accounts)	Higher TDS/TCS if not quoted

8.  Quoting and Authentication of PAN in The Documents Pertaining to Prescribed Transactions [Section 139A(6A)]

Here’s a detailed analysis of Section 139A(6A) (effective September 1, 2019) regarding the quoting and authentication of PAN in prescribed transactions, along with its interplay with Aadhaar and related rules:

1. Key Provision: Section 139A(6A)

Introduced by the Finance (No. 2) Act, 2019, this subsection allows:

• Interchangeability of PAN and Aadhaar: Individuals with both PAN and Aadhaar (linked under Section 139AA) may quote Aadhaar instead of PANin transactions where PAN is mandatory.
• Auto-allotment of PAN: For those without PAN but with Aadhaar, quoting Aadhaar triggers automatic PAN allotmentusing UIDAI data.

Purpose: To simplify compliance and expand the tax base by leveraging Aadhaar’s universality.

2. Mandatory Quoting in Prescribed Transactions

Under Rule 114B, PAN/Aadhaar must be quoted in high-value transactions, including:

TRANSACTION	THRESHOLD
Sale/purchase of immovable property	₹10 lakh+
Bank deposits/withdrawals	₹50,000+ per day or ₹20 lakh+ annually
Mutual fund/debenture purchases	₹50,000+ per transaction
Hotel/travel payments (cash)	₹50,000+ per bill
Goods/services transactions	₹2 lakh+ per transaction

Exception: Non-residents without Indian income may use alternative IDs (e.g., passport) for IFSC banking unit transactions.

3. Authentication Requirements

• Seller’s Obligation (Rule 114C(2)): Must verify and ensurethe buyer’s PAN/Aadhaar is correctly quoted in invoices for transactions exceeding ₹2 lakh.
• Buyer’s Obligation (Section 139A(6)): Must ensure their PAN/Aadhaar is quotedin received documents (e.g., invoices, contracts).
• Form 60: For those without PAN, a declaration in Form 60 is required, except for companies/firms.

4. Penalties for Non-Compliance

• False/Invalid PAN: ₹10,000 per default under Section 272B.
• Unlinked PAN: Becomes inoperative, attracting higher TDS/TCS rates and disallowance of tax benefits.
• Late Aadhaar Linking: ₹1,000 penalty under Section 234H.

5. Recent Updates (2024–2025)

• PAN-Aadhaar Link Deadline: Extended to December 31, 2025, for PANs issued pre-October 2024.
• IFSC Banking Units: Relaxed PAN requirements for foreign companies/NRIs transacting in IFSCs, provided they have no taxable income in India.

Summary of Key Rules

PROVISION	REQUIREMENT	PENALTY
Section 139A(6A)	Aadhaar can replace PAN if linked	PAN inoperative if unlinked
Rule 114B	Lists transactions requiring PAN/Aadhaar (e.g., property, investments)	Higher TDS/TCS if not quoted
Rule 114C(2)	Sellers must verify buyer’s PAN/Aadhaar for ₹2L+ transactions	₹10,000 per default

9.  Section 139A(6B) – Obligation to Verify PAN / Aadhaar in Prescribed Transactions (Effective from September 1, 2019)

1. Key Provision

Section 139A(6B) imposes a legal obligation on any person receiving documents related to prescribed financial transactions to:

• Ensure PAN or Aadhaar is quotedin the document.
• Authenticate the PAN/Aadhaar(if required under Income Tax Rules).

2. Applicability

This applies to:
✔ Banks (for account opening, deposits, loans)

✔ Brokers (for demat accounts, share trading)

✔ Property Registrars (for real estate transactions)

✔ Mutual Funds/Insurance Companies (for investments)

✔ Hotels/Travel Agencies (for high-value cash payments)

✔ Any entity receiving documents for transactions listed under Rule 114B

3. Authentication Process

The recipient must:

• Verify PAN validityvia:
  • Income Tax e-filing portal
  • NSDL/TIN-NSDL PAN verification service
• Cross-check Aadhaar(if quoted instead of PAN) with UIDAI records
• Maintain recordsof verification for 7 years

4. Penalties for Non-Compliance

• ₹10,000 per defaultunder Section 272B for:
  • Accepting documents without PAN/Aadhaar
  • Failing to authenticate properly
• Higher TDS/TCS deduction(20% instead of 1-10%) if PAN not verified
• Potential prosecutionfor aiding tax evasion

5. Exemptions

• Non-residents(may provide passport/other ID)
• Government entitiesin official transactions
• Transactions below threshold limitsin Rule 114B

6. Recent Updates (2024)

• Aadhaar-PAN linking mandatoryfor PAN validity
• New online verification toolsintroduced for faster authentication

Practical Impact:

• Banks must now reject account openings without verified PAN/Aadhaar
• Property deals require double verification (PAN + Aadhaar authentication)
• Financial institutions face stricter compliance audits

Compliance Tip:

Entities should implement:

✔ Automated PAN verification systems

✔ Staff training on authentication procedures

✔ Digital record-keeping for audit trails

10.   Consequences for Non-Compliance with Section 139A, As Penalized Under Section 272B (1)

Here’s a detailed analysis of the consequences for non-compliance with Section 139A, as penalized under Section 272B(1) of the Income Tax Act, 1961:

1. Penalty for Non-Compliance

• Default: Failure to comply with Section 139A (e.g., not applying for PAN, not quoting PAN/Aadhaar in prescribed transactions, or providing false details).
• Penalty: ₹10,000 per defaultimposed by the Assessing Officer (AO).
  • Example: A freelancer failing to quote PAN in invoices for high-value services attracts a penalty of ₹10,000 per invoice.

2. Specific Violations Covered

• Failure to obtain PANdespite being mandated (e.g., taxable income exceeding ₹2.5 lakh).
• Non-quoting of PAN/Aadhaarin documents like property deeds (₹10L+), bank accounts, or TDS certificates.
• Submitting false PAN/Aadhaar
• Failure to authenticate PAN/Aadhaarin transactions under Section 139A(6A).

3. Additional Consequences

• Higher TDS/TCS Rates: Defaulters face 20% TDS instead of lower rates (e.g., 10% for property purchases).
• Inoperative PAN: Unlinked PANs (post-Aadhaar linkage deadline) become invalid, blocking tax filings and refunds.
• Legal Prosecution: Repeated defaults may lead to prosecution for tax evasion.

4. Exceptions & Defenses

• Reasonable Cause: Penalty waived if the assessee proves genuine inability (e.g., deductees not providing PAN despite requests).
  • Case Law: In GAIL (India) Ltd., penalties were deleted as contractors failed to intimate PANs.
• Technical Errors: Corrected defaults (e.g., revised TDS returns with PANs) may avoid penalties.

5. Procedural Safeguards

• Hearing Opportunity: AO must grant a hearing before imposing penalties.
• Discretionary Levy: Penalty is not mandatory; AO may consider intent (e.g., unintentional oversight vs. willful neglect).

Summary Table

VIOLATION	PENALTY	ADDITIONAL IMPACT
Non-application for PAN	₹10,000	Higher TDS, blocked refunds
False PAN submission	₹10,000 per case	Prosecution risk
Unauthenticated PAN in documents	₹10,000	Transaction refusal (e.g., property)

11.  Penalty for Quoting or Intimating False PAN [Section 272B (2)]

Section 272B(2) of the Income Tax Act, 1961, imposes penalties for knowingly quoting or intimating a false PAN or Aadhaar number in documents or transactions where quoting PAN is mandatory. Below is a detailed breakdown:

1. Applicability of Section 272B(2)

The penalty applies if:

• A person quotes a false PAN/Aadhaarin documents referred to in Section 139A(5)(c), (5A), (5C), or (6A) .
• The person knows or believes the PAN/Aadhaar to be falseor does not believe it to be true.
• The false quotation occurs in transactions like:
  • TDS/TCS filings(Form 16A, 26Q, etc.).
  • High-value transactions(property deals, bank deposits, mutual funds).
  • Income tax returns (ITR)or other statutory filings.

2. Penalty Imposed

• ₹10,000 per default.
  • Example: If a taxpayer submits a fake PAN in three property transactions, the penalty could total ₹30,000.
• The penalty is discretionary—levied only after giving the person an opportunity to explain.

3. Exceptions & Defenses

• No penalty if:
  • The error was unintentional(e.g., deductees provided wrong PANs, later corrected).
  • The person proves reasonable cause(e.g., technical error, lack of knowledge).
• Case Law:
  • GAIL (India) Ltd.: Penalty deleted as contractors failed to provide PANs.
  • Hindustan Steel Ltd. v. State of Orissa: Penalty not imposed unless conduct is “contumacious or dishonest”.

4. Recent Enforcement (2024–2025)

• AI-based tracking: The Income Tax Department uses data analyticsto flag false PANs in high-value transactions.
• Stricter PAN-Aadhaar linkage: Unlinked PANs are inoperative, increasing scrutiny.

5. Key Takeaways

ACTION	PENALTY	DEFENSE
Quoting fake PAN knowingly	₹10,000 per case	Must prove lack of intent
Submitting incorrect Aadhaar	₹10,000 per case	Corrective filing may waive penalty
Multiple PANs (non-surrender)	₹10,000 per PAN	Surrender duplicate PANs to avoid

Avoid penalties by:

✔ Verifying PAN/Aadhaar before submission.

✔ Correcting errors via revised filings (e.g., updated TDS returns).

✔ Linking PAN-Aadhaar before December 31, 2025