For proper credit of tax deposited, TDS, TCS and to avoid penalty for wrong PAN be patient, alert and careful while writing PAN

[Mrs. Uma Kothari]

Permanent Account No. (PAN) is quite complex to remember or reproduce :

PAN is a specially designed alphanumeric code of 10 characters consisting of  first five and last one characters as capital letters of English language and between them there are four numerical numbers. In case of individuals the fifth letter is first letter of his/ her surname. In case of other assesses the fifth letter is the first letter of the name of the PAN holder. For example in case of Mr. Dev Kumar Kothari the fifth letter in his PAN will be K whereas in case of Dev Kumar Kothari HUF the fifth letter will be D. In case of  D.K.Kothari & Co., a partnership firm or D.K.Kothari Co. P. Ltd the fifth letter will be D.

As per website of the income-tax department Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department. A typical PAN is AABPS1205E.

A complex number difficult to remember and prone to mistakes while writing:

We find that PAN 's are  difficult to remember because it is lengthy and lack any pattern or rhythm. It requires good clerical skills even to copy PAN from one document to other document. Many times the author has noticed documents prepared by officials of income-tax department bear wrong PAN of assessee, and many times it is written in confusing manner. Recently in a case it was found that three documents namely the assessment order, demand notice and  show cause notice for penalty in case of an assessee had different PAN at three places one was correct and  two  were wrong or confusing. This shows that even when clerks of the income-tax department, who are good in clerical work, and write PAN several times and work very patiently and calmly are prone to commit mistakes while writing / typing PAN while they copy it from some other document. 

Requirement to quote or mention Permanent Account No. (PAN)

Considering profile of readers  suffice is to say that in some circumstances a person is required to obtain a PAN or in some circumstances the A.O. can allot PAN. The assessee is required to correctly mention PAN in returns, challans, and petitions and in all correspondence with income-tax authorities and in certain specified documents in relation to prescribed transactions. Many other persons are also required to quote PAN of various parties concerned with a given document correctly. In some cases the party receiving a document or entering into transaction is also required to obtain and ensure that PAN of other party is mentioned correctly. Non-compliance may attract penal action not for the assessee but also other concerned persons. Though provisions are popular the author feels need of a critical analysis of the provisions.

                        Table regarding provisions relating to use of PAN:

Provisions	Brief analysis
[Permanent account number 139A. (1) Every person,—        (i)  if his total income or the total income of any other person in respect of which he is assessable under this Act during any previous year exceeded the maximum amount which is not chargeable to income-tax; or       (ii)  carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed five lakh rupees in any previous year; or      (iii)  who is required to furnish a return of income under [sub-section (4A) of section 139; or      (iv)  being an employer, who is required to furnish a return of fringe benefits under section 115WD,] and who has not been allotted a permanent account number shall, within such time, as may be prescribed, apply to the Assessing Officer for the allotment of a permanent account number.	Circumstances in which a person is required to apply for PAN when certain provisions of the Income-tax Act apply.
(1A) Notwithstanding anything contained in sub-section (1), the Central Government may, by notification in the Official Gazette, specify, any class or classes of persons by whom tax is payable under this Act or any tax or duty is payable under any other law for the time being in force including importers and exporters whether any tax is payable by them or not and such persons shall, within such time as mentioned in that notification, apply to the Assessing Officer for the allotment of a permanent account number.]	Circumstances in which a person may be required to apply for PAN in case of applicability of certain specified circumstances or provisions of other laws, as may be notified by the Central Government.
(1B) Notwithstanding anything contained in sub-section (1), the Central Government may, for the purpose of collecting any information which may be useful for or relevant to the purposes of this Act, by notification in the Official Gazette, specify, any class or classes of persons who shall apply to the Assessing Officer for the allotment of the permanent account number and such persons shall, within such time as mentioned in that notification, apply to the Assessing Officer for the allotment of a permanent account number.]	Central Government may prescribe persons who will be required to obtain PAN and comply with requirements relating to compilation and furnishing of information.
(2) The Assessing Officer, having regard to the nature of the transactions as may be prescribed, may also allot a permanent account number, to any other person (whether any tax is payable by him or not), in the manner and in accordance with the procedure as may be prescribed.]	The A.O. may allot PAN in some prescribed circumstances.
(3) Any person, not falling under sub-section (1) or sub-section (2), may apply to the Assessing Officer for the allotment of a permanent account number and, thereupon, the Assessing Officer shall allot a permanent account number to such person forthwith.	Voluntary application for PAN without being legally required. The A.O.shall allot PAN forthwith.
(4) For the purpose of allotment of permanent account numbers under the new series, the Board may, by notification in the Official Gazette, specify the date from which the persons referred to in sub-sections (1) and (2) and other persons who have been allotted permanent account numbers and residing in a place to be specified in such notification, shall, within such time as may be specified, apply to the Assessing Officer for the allotment of a permanent account number under the new series and upon allotment of such permanent account number to a person, the permanent account number, if any, allotted to him earlier shall cease to have effect:	About application for PAN in new series.
Provided that the persons to whom permanent account number under the new series has already been allotted shall not apply for such number again.	Prohibition on new application after PAN in new series has been allotted.
(5) Every person shall—       (a)  quote such number in all his returns to, or correspondence with, any income-tax authority;       (b)  quote such number in all challans for the payment of any sum due under this Act;       (c)  quote such number in all documents pertaining to such transactions as may be prescribed by the Board in the interests of the revenue, and entered into by him:              Provided that the Board may prescribe different dates for different transactions or class of transactions or for different class of persons:               [Provided further that a person shall quote General Index Register Number till such time Permanent Account Number is allotted to such person;]	Requirements to quote PAN/ GIR
(d)  intimate the Assessing Officer any change in his address or in the name and nature of his business on the basis of which the permanent account number was allotted to him.	Intimation to the A.O. about ANY change in any information relating to PAN
[(5A) Every person receiving any sum or income or amount from which tax has been deducted under the provisions of Chapter XVIIB, shall intimate his permanent account number to the person responsible for deducting such tax under that Chapter :  [***] Provided further that a person referred to in this sub-section shall intimate the General Index Register Number till such time permanent account number is allotted to such person.	Intimation to the tax deductor of PAN or GIR.
(5B) Where any sum or income or amount has been paid after deducting tax under Chapter XVIIB, every person deducting tax under that Chapter shall quote the permanent account number of the person to whom such sum or income or amount has been paid by him—        (i)  in the statement furnished in accordance with the provisions of sub-section (2C) of section 192;       (ii)  in all certificates furnished in accordance with the provisions of section 203;      (iii)  in all returns prepared and delivered or caused to be delivered in accordance with the provisions of section 206 to any income-tax authority;     [(iv)  in all quarterly statements prepared and delivered or caused to be delivered in accordance with the provisions of sub-section (3) of section 200:] Provided that the Central Government may, by notification in the Official Gazette, specify different dates from which the provisions of this sub-section shall apply in respect of any class or classes of persons:	Tax deductor is required to quote PAN of persons from whose income tax has been deducted, in various documents relating to TDS.
Provided further that nothing contained in sub-sections (5A) and (5B) shall apply in case of a person whose total income is not chargeable to income-tax or who is not required to obtain permanent account number under any provision of this Act if such person furnishes to the person responsible for deducting tax, a declaration referred to in section 197A in the form and manner prescribed thereunder to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.	Exceptions from quoting PAN by tax deductor in some cases where payee has no PAN and his income is below taxable limits etc.
(5C) Every buyer [or licensee or lessee] referred to in section 206C shall intimate his permanent account number to the [person responsible for collecting tax] referred to in that section.	Intimation of PAN by buyer, licensee or lessee where S.206C relating to TCS apply.
(5D) Every [person] collecting tax in accordance with the provisions of section 206C shall quote the permanent account number of every buyer [or licensee or lessee] referred to in that section—        (i)  in all certificates furnished in accordance with the provisions of sub-section (5) of section 206C;       (ii)  in all returns prepared and delivered or caused to be delivered in accordance with the provisions of sub-section (5A) or sub-section (5B) of section 206C to an income-tax authority;]     [(iii)  in all quarterly statements prepared and delivered or caused to be delivered in accordance with the provisions of sub-section (3) of section 206C.]	Tax collector to quote PAN in various documents relating to TCS.
(6) 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] has been duly quoted in the document.	The person or authority receiving specified documents shall ensure that PAN/ GIR is quoted in the document.
(7) No person who has already been allotted a permanent account number under the new series shall apply, obtain or possess another permanent account number. [Explanation.—For the removal of doubts, it is hereby declared that any person, who has been allotted a permanent account number under any clause other than clause (iv) of sub-section (1), shall not be required to obtain another permanent account number and the permanent account number already allotted to him shall be deemed to be the permanent account number in relation to fringe benefit tax.]	No application, obtaining or possessing alternate  PAN when a PAN in new series has been allotted. Same PAN for FBT new PAN not required..
(8) The Board may make rules providing for—       (a)  the form and the manner in which an application may be made for the allotment of a permanent account number and the particulars which such application shall contain;       (b)  the categories of transactions in relation to which Permanent Account Numbers or the General Index Register Number] shall be quoted by every person in the documents pertaining to such transactions;        (c)  the categories of documents pertaining to business or profession in which such numbers shall be quoted by every person;      [(d)  class or classes of persons to whom the provisions of this section shall not apply;        (e)  the form and the manner in which the person who has not been allotted a Permanent Account Number or who does not have General Index Register Number shall make his declaration;        (f)  the manner in which the Permanent Account Number or the General Index Register Number shall be quoted in respect of the categories of transactions referred to in clause (c);       (g)  the time and the manner in which the transactions referred to in clause (c) shall be intimated to the prescribed authority.] Explanation.—For the purposes of this section,—       (a)  "Assessing Officer" includes an income-tax authority who is assigned the duty of allotting permanent account numbers;  (b) "permanent account number" means a number which the Assessing Officer may allot to any person for the purpose of identification and includes a permanent account number allotted under the new series;  (c) "permanent account number under the new series" means a permanent account number having ten alphanumeric characters and issued in the form of a laminated card;]  (d)  "General Index Register Number" means a number given by an Assessing Officer to an assessee in the General Index Register maintained by him and containing the designation and particulars of the ward or circle or range of the Assessing Officer.]	Power of the board to make rules in relation to various matters concerning PAN. A.O. includes specified authority who is assigned the duty to allot PAN. Meaning of PAN of two types- old PAN and PAN in new series.. PAN in new series- issue of a laminated card is prerequisite. GIR number- a number indicative of identification number of assessee, designation of A.O. and  ward/ circle , where assessee is assessed.

GIR and PAN:

GIR no can be quoted, mentioned and intimated till a PAN is issued. Once PAN is allotted, PAN must be used. Once PAN in new series is issued the PAN in new series should be used. As per experience it appears that while communicating with income tax department the PAN in new series / PAN need to be used but GIR no can also be mentioned for administrative convenience.

                                              Table regarding penalty provision:

Provisions	Brief analysis
[Penalty for failure to comply with the provisions of section 139A. 272B. (1) If a person fails to comply with the provisions of section 139A, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees.	This clause apply to all concerned persons like  the assessee or a person who is required to obtain PAN , intimate PAN to concerned persons, and any other person like tax deductor, tax collector, TDS/TCS return filer, a person who issue TDS/TCS certificate, a person who is required to ensure that a document presented to him bears PAN, in the specified circumstances etc.
(2) If a person who is required to quote his permanent account number in any document referred to in clause (c) of sub-section (5) of section 139A, or to intimate such number as required by sub-section (5A) [or sub-section (5C)] of that section, quotes or intimates a number which is false, and which he either knows or believes to be false or does not believe to be true, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees. (3) No order under sub-section (1) or sub-section (2) shall be passed unless the person, on whom the penalty is proposed to be imposed, is given an opportunity of being heard in the matter.]	PAN is required to be quoted on all correspondence with any income tax authority. Omission in: obtaining PAN, intimating PAN, quoting PAN, ensuring that document received bears PAN as well as wrongly quoting PAN etc. can be considered as  defaults or non -compliance of the provisions.. For each default penalty of Rs.ten thousand can be levied. However it is in  discretion of the A.O. This clause apply only to the person who holds PAN that is in whose favor and name PAN is allotted. or his representative. This clause is attracted in case where the concerned person either knows or believes that the PAN quoted, or intimated is false or if he does not believe it to be true. Provision relating to give an opportunity of hearing. is equally applicable in all cases where penalty proceeding is initiated for any omission or mistake in quoting PAN as discussed earlier. An opportunity to hear implies need to examine reasons of failure or mistakes.
Section 273B also provides that no penalty shall be imposed under section 272B if it is proved that there was reasonable cause for the failure.	Reasonable cause should be shown. For this purpose right from beginning record should be maintained to show reasons that caused failure or mistakes.

Wrong PAN and TDS and  TCS- credit will not be allowed:

If a person gives wrong PAN to the tax deductor / collector and  wrong PAN is mentioned in TDS/ TCS certificate and / or in  TDS / TCS  returns, then the payee of income may not be allowed credit for TDS / TCS. The amount of TDS / TCS  will also not be reflected in online Form 26A on the websites of the department  which shows details of tax deducted , tax collected and  deposited tax paid etc. Therefore, it is in the interest of PAN holder to be careful in intimating his PAN correctly to concerned parties. It is strongly advised that specific letterhead can be made and saved in computer for each assessee to indicate name, address, PAN, TAN etc. which are according to information recorded with the income-tax department.

Extreme care is required in quoting PAN:

In view of importance of correct PAN and the penalty which may be levied if wrong PAN is quoted, it is imperative that utmost care should be taken in writing, copying PAN. The best course is to maintain Photo copies of PAN card of all clients. The assessee should maintain a standard letter head in his computer in which name, address, PAN , TAN etc. can be correctly incorporated. Whenever a letter is to be written to any income-tax authority, or to other party intimating PAN this letter head can be used.

Practioner can also use such letter head for each client and they can sign the letter written on such letter with indication of capacity of the signatory to the letter. 

Letter head for communication with I.T. authorities:

For each assessee / client a specially designed letter head can be prepared and saved in computer. this should clearly and correctly  show the name , address and PAN of assessee. This will avoid mistakes in quoting PAN. this will also reduce working time.

While copying PAN the photo copy of PAN card should preferably be used. An enlarged photo copy can be more convenient. This will avoid chances of consequential mistake of mentioning wrong PAN, in case the document from which PAN is quoted itself bears a wrong PAN.

The PAN and PAN holders name should ^{be written, copied simultaneously, this will avoid chances of copying PAN from PAN card of some other person.}

Reasons for mistake in quoting PAN:

As discussed earlier it is very difficult to remember PAN. Even copying of PAN from one source document to other document require good clerical skills. Therefore, first of all it is required that the person who is writing / typing PAN is having good clerical aptitude of correctly reading, telling, listening and writing. In case of low clerical aptitude or  kill (Senior  persons are generally  very poor in clerical work), there will be more chances of mistake in mentioning PAN - so it is better to avoid). In spite of care there can be mistake while writing PAN for several reasons. Few example are given below:

a. mistake in source document-   

If there is wrong PAN on the document from where PAN is quoted, then naturally as a consequence wrong PAN will be mentioned in the new document. For example, suppose PAN is taken from an assessment order or notice received from income tax department or last years return  and the assessment order or the notice issued by the A.O. or the last years return bears wrong PAN. Then naturally as a consequence, wrong PAN will be mentioned on the new document on which PAN is being mentioned by copying from old document. Usually while replying to any notice or drafting appeal etc. practioner take  the PAN as  mentioned in the order or notice.  However, many times PAN on such documents is mentioned wrong or in a confused manner. We must remember that for the A.O. there is no clear provision for levy of penalty in case he quote wrong PAN, however, for assessee there is a penalty. Therefore, it is advisable to take PAN from photo copy of PAN card or use specially designed letter head and in case of need copy from it and paste at new document keeping in mind that there is no distortion while copying and pasting.

In case it can be pointed out that the basic document from where PAN was quoted had a wrong PAN and as a consequence mistake took place, there may be a reasonable cause for mistake and ground fro not levying or waiving penalty.

Communication barriers:

      Communication barriers are major reasons for mistake in quoting PAN. Even when one person copy PAN from one document to other document, there can be mistake in reading, and then writing PAN.

When two persons are involved - one telling PAN and other person writing , the risks of communication barriers increases - in reading and speaking by one person, and in listening and writing by other person. When the communication is by telephone, the risk of mistakes further increases.

Poor eyes sight, poor hearing capacity, poor lighting, crowded and noisy place can be attributing reasons for wrongly writing PAN.

Last moment work:

Work done during last moment is likely to suffer from more clerical mistakes due to fatigue, haste and fear of missing the bus.

In case of penalty proceedings:

Clerical mistakes committed by assessee or his  agents  or staff of agent can be a good ground for mistake because the mistake is committed by a person relied on by assessee or his agent.. Particularly if a mistake is found in a document which was relied on while copying (say from an assessment order), it can be a good ground for the mistake committed and thus for not levying penalty or for waiver of penalty.

Bonafide should be established by showing that there was no intention to avoid disclosure of correct PAN , any income or other matter and that due to mistake the assessee has already suffered a loss  due to delay in processing, refund and there was no possible gain by quoting wrong PAN.

That name and  address ( or address of branch of assessee) has been correctly mentioned, therefore, there was no malafide or ulterior purpose to avoid tax or avoid enquiry etc..

That revenue has not suffered due to wrong mention of PAN.

The ground should be made for reasonable cause for failure or mistake so that the authority can exercise his discretion in not levying penalty or waiving penalty levied by A.O. In case a cause is not made out, penalty of Rs. ten thousand for each default will be levied. There seems no scope for levying lesser amount of penalty.