In a case where, the taxpayer, Roshni Sharma’s PAN card was used by a fraudster to claim exemption. Most interestingly, she has never rented out any property throughout her life. However, during a recent review of the income tax portal, she discovered that her Permanent Account Number (PAN) had been misused by an individual to fraudulently claim a House Rent Allowance (HRA) tax exemption.
Surprised by this revelation, the taxpayer lodged a Right to Information (RTI) application with the Central Public Information Officer (CPIO) of the Income Tax (IT) Department, seeking information about the person who had improperly utilized her PAN to avail of HRA benefits.
The taxpayer noticed that someone had falsely listed her as the landlord and claimed to have paid her Rs. 1,49,826/- as rent for the previous year. However, the taxpayer clarified that she had never rented out any accommodation at any point in her life.
In her RTI application, Roshni requested the following details while expressing her concerns about the situation. She sought information regarding the individual who falsely made her his landlord so that he could get a tax exemption.
- She requested the complete name, address, and father’s name of this person.
- Additionally, she sought details concerning the particular years in which he claimed her as his landlord.
- Furthermore, she requested a copy of any rent receipt or rent agreement that he may have presented to support his claim for rent payment.
Despite her diligent efforts, Roshni Sharma, the taxpayer, faced disappointment when her request to seek the individual’s information was denied by the Central Public Information Officer (CPIO). The CPIO claimed that the sought-after details were not maintained or available, and this may cause concerns about the disproportionate diversion of office resources to compile such information.
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Unsatisfied with the CPIO’s response, Roshni filed a First Appeal. However, her hopes for a favourable outcome were crushed when the First Appellate Authority (FAA) upheld the CPIO’s decision. Again, Roshni took the issue to the Central Information Commission (CIC) with an immediate Second Appeal. Unfortunately, despite her efforts, she was unable to obtain the desired information.
In an order dated 27-09-2023, Information Commissioner Saroj Punhani said that no further relief could be granted in this particular case. However, he did provide guidance to the aggrieved taxpayer, suggesting that she pursue alternative avenues through an “appropriate channel” to seek resolution. Although faced with setbacks, Roshni remains determined to pursue justice and explore other options available to address this matter.
What Does the Appropriate Channel Clarification Suggest?
Roshni was determined that she would get justice so she sought clarification on the “appropriate channel” mentioned by the Central Information Commission (CIC) since it is not explicitly outlined in the Right to Information Act (RTI Act) of 2005.
A tax expert explains that the RTI Act allows individuals to request information for themselves or on public matters, but not specifically for someone else. Thus, the denial of information by the Central Public Information Officer (CPIO) was justified. The term “appropriate channel” referred to by the CIC, while not explicitly mentioned in the RTI Act, generally refers to tax authorities or judicial channels, said the expert.
The misuse of the Permanent Account Number (PAN) is an offence and may put the taxpayer in an un-invited hurdle. This act did put the taxpayer in inconvenience to the extent of harassment/injustice for acts done by other persons. In such cases, the victims are suggested to consider approaching the Grievance Redressal platform of the Income Tax Department. If no resolution is found, the last resort could be filing a case in a civil court to seek justice.
This Did Not Happen For the First Time
This misuse of a PAN card has not happened the first time, as tax experts face such cases often, where individuals fraudulently use someone else’s PAN to claim false House Rent Allowance (HRA) deductions. Another tax expert highlights that the Income Tax Department cross-references such information with the tax returns of the PAN holder. If discrepancies are identified, the individual receives a notice and is required to prove that they did not receive the claimed rent. This process can be burdensome and stressful.
Experts emphasize that many taxpayers only become aware of the misuse of their PAN numbers when they receive notices from the Income Tax Department.
It is crucial for individuals to remain vigilant and act promptly if they suspect the misuse of their PAN. Seeking redress through the appropriate channels, such as the Grievance Redressal Mechanism within the Income Tax Department, can help address these issues.
How to Know If Your PAN Has Been Used by Someone or Not?
Discovering whether your PAN has been misused is crucial if you want to keep your tax records clean. Tax experts suggest several methods to determine if someone has falsely claimed rent payments on your behalf.
Reviewing your Tax Information Statement is one way to identify such false claims. Although it may not provide the individual’s name, it typically reveals the name of the company associated with the fraudulent claim.
A tax lawyer advises that errors related to incorrectly quoted PANs can be found in Form 26AS. To correct the PAN details, you can submit a correction statement through the NSDL website.
Alternatively, if the PAN information needs correction in e-TDS statements/returns, the deductor (employer) can make online corrections through the CPC-TDS portal (www.tdscpc.gov.in). If you find such an error, you have two primary options:
What are the Actions You Can Take?
- Contact the person or company responsible for the false claim and request a correction. Once rectified, the updated details will be reflected in the tax department’s records.
- If direct correction is not possible, log into the income tax portal and submit a response against the incorrect tax summary. This notifies the tax department that you contend the false rent claim made on your behalf.
In such cases, it is advisable to inform the tax department or your employer about this practice done by someone else. Your employer can guide you on the necessary steps and make corrections in your TDS or at least provide some assistance avoiding any further adverse consequences.
It is essential to keep copies of all communication and relevant documents related to this issue. Addressing the matter in the first place is crucial to prevent potential tax or legal consequences. The victim should consult with a professional tax advisor and seek a personalized solution.
What Can Do When You Receive Tax Notice for Claiming Fake Rent?
If you receive a tax notice as a result of such a fake rent claim using your PAN, it is crucial to provide clear evidence that you did not receive the claimed rent. It is advisable to seek guidance from a tax professional to tackle such issues as per the law.
When responding to tax authorities, put your point firmly that you are not the owner of the property in question. If the department has evidence to the contrary, they should present it to you. Cooperating with the Income Tax Department throughout the resolution process is crucial, especially if you did not have such income in previous years.
