2 Persons, 1 PAN: Madras HC Orders Income Tax Dept to Allot New Number After Original Holder Denied Loans Over Low CIBIL [Read Order]

The Madras High Court recently directed the Income Tax Department to allot a fresh Permanent AccountNumber (PAN) to an assessee after it was found that the same PAN had been erroneously issued to another person who defaulted on loans, leading to severe credit consequences for the original holder.

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The petitioner, S. Senthil had originally applied for a PAN and was issued PAN No. BLUPS2797G on 18.05.2007. However, the same PAN number was again allotted on 17.05.2012 to another individual named Subramaniyan Senthil S/o Subramaniyan. The second allottee subsequently availed loans and allegedly defaulted on the same, resulting in the particulars and credit eligibility of the petitioner being compromised in the credit approval systems.

The petitioner’s apparent negative CIBIL history resulted in financial institutions declining loan applications, as the relating to the second allottee was automatically mapped to the petitioner’s PAN identity. The petitioner then made representations before the authorities of suspected fraudulent use of his PAN.

After investigation, the Income Tax Department eventually issued a new PAN to the second allottee, but the petitioner continued to face the consequences of the negative history of his original PAN number.

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Though the petitioner requested the Department to issue a Fresh PAN number to him, they relied on Instruction No.9 ITBA-PAN dated 25.03.2021 issued by the Directorate of Income Tax (Systems), New Delhi, as per which the first allottee will have to retain the PAN and the second allottee will be allotted with fresh PAN, prompting him to seek judicial intervention.

The petitioner was represented by S. Santhosh while the respondents were represented by Junior Standing Counsel Avinash Krishnan Ravi.

Justice C. Saravanan examined the events leading up to the petitioner’s impaired credit standing and at the outset noted that the Petitioner cannot be made to suffer on account of the mistakes committed by the Income Tax Department.

The Court observed that adhering to Instruction No.9 ITBA-PAN issued by the department led to the petitioner being continuously harmed, whose financial identity remained linked to the defaults committed by the second allottee.

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The High Court concluded that the petitioner be issued a new PAN, and the second allottee should have been allowed to continue with the tainted PAN as CIBIL remarks are pertaining to that person.

Accordingly, the Madras High Court directed the Income Tax Department to issue a fresh PAN to the petitioner, after ensuring that he has no impending dues, arrears or tax liabilities linked to the older PAN number, within a period of 3 months the date of of receipt of a copy of the order,