Tax Authorities Crack Down on Property Deals Using Fake PANs
Tax authorities across India are intensifying their scrutiny of property deals, uncovering numerous transactions that have evaded detection due to erroneous or fictitious PANs. This initiative aims to curb benami transactions and unaccounted wealth.
Officials in the investigation wing of the tax office are now inspecting records of property registrars to verify details. Registrars of properties are required to report details of purchases and sales of properties valued at ₹30 lakh or more. However, there are instances where parties involved, in collusion with some officials in registrar offices, ensure that deals go unreported or are filed with erroneous PANs or names, making it difficult to trace them back.
The move is part of a broader and strategic nationwide push to curb benami transactions and unaccounted wealth. High-value real estate transactions have long been used as a channel to park black money, often concealed through proxies or shell entities. To strengthen the system, a key reform worth considering is the mandatory e-verification of PAN and Aadhaar for all parties before property registration. This move could help eliminate the use of fake or incorrect PAN or Aadhaar details, enhance traceability, and ensure that property records reflect genuine ownership, thus acting as a deterrent against tax evasion, according to Ashish Karundia, founder of the CA firm Ashish Karundia & Co.
Earlier this year, the I-T department conducted a nationwide probe to track persons and entities who have shown agricultural income of ₹50 lakh or more without owning any land. It simultaneously looked into cases of inflated farm income of ₹5 lakh or more per acre, where such declarations were inconsistent with general trends and publicly available data.
Tax officials have examined property deal records with registrars in cities such as Varanasi, Lucknow, Gorakhpur, Kanpur, and Bhopal. The department has asked its field formations to conduct inspections and surveys after analyzing the data. The exercise is part of the department's 'nudge campaign' to improve compliance and promote voluntary disclosures. Based on this, most field formations are carrying out over two dozen survey and inspection actions.
Under Rule 114E of the I-T Rules, banks are required to report details of high-value cash deposits and withdrawals by account holders to the tax office. According to Manish Dafria, managing partner of V.K. Dafria & Co., a CA firm based in Indore, similar to property transactions, the tax department is also believed to have received information that certain banks—especially some smaller co-operative banks where internal controls are weak—are not reporting details of account holders indulging in large cash transactions.
Over the past two to three months, officials in the Intelligence and Criminal Investigation wing of the I-T department have conducted outreach programmes in cities like Indore, Bhopal, Lucknow, and Jaipur to stress the importance of accurate reporting. This was followed by surveys at the head offices of certain co-operative banks, where officials found discrepancies between actual cash deposits or withdrawals and the figures reported by the banks.
Such information submitted by banks and registrars is reflected in taxpayers' Annual Information Statements, and based on matching with a taxpayer's overall profile, returns are selected for scrutiny and reassessment. Thus, it is vital for the department to receive accurate data from the source about all reportable transactions.
