An investigation by the Income Tax Department has revealed that 154,000 accounts were established at J&K Bank from 2021 to 2024 without any linked Permanent Account Numbers (PAN). The inquiry, detailed by The Indian Express, indicates that these accounts collectively processed transactions exceeding ₹4.88 lakh crore, with each account recording transactions of ₹15 lakh or more in a financial year.
The final report, submitted by the Income Tax Department late last year, highlighted serious concerns about a “systemic failure” and identified these unlinked accounts as a “significant red flag.” The department warned that the high volume of transactions in these accounts represents a considerable opportunity for tax evasion.
Most of the scrutinized accounts were savings accounts set up simply by submitting Form 60, which serves as a declaration for individuals without PANs. The investigation uncovered that these accounts included a variety of entities and individuals who had opened multiple accounts without any PAN linkage. A notable finding was that significant transactions were being conducted without being reported to the Income Tax Department.
Initially, the probe was triggered when J&K Bank provided a substantial data set to the Income Tax authorities during the 2024 Assembly elections. This led to an extensive inquiry authorized by the Reserve Bank of India.
Among the findings, it was noted that many account holders created numerous accounts without any PAN details; large sums were moved through these accounts without proper disclosure to the tax authorities. The investigation traced 68 accounts opened between 2004 and 2013, many belonging to textile businesses in the region, which conducted considerable transactions without notifying the Income Tax Department.
As the investigation expanded, J&K Bank acknowledged its failure to identify the issue of large transactions made through accounts established solely with Form 60. The bank disclosed that it charges a 20% tax deducted at source (TDS) on interest for these non-linked accounts, compared to the 10% for those linked to PANs.
The inquiry also discovered that unlinked accounts were utilized to access various government schemes, such as the J&K Bank Bima Bachat Khata and the Prime Minister’s Employment Generation Programme (PMEGP). For example, one account designated for NCC cadets recorded total credits of ₹1.55 crore.
The investigation further scrutinized the top 30 private accounts without PANs, tracing their PAN numbers and comparing the findings with the Income Tax Returns (ITRs). In 11 instances, including businesses like cement stores and gas stations, the deposits in J&K Bank accounts were found to exceed the amounts declared in their ITRs.
Although accounts without PANs constitute less than 1% of J&K Bank’s total of over 20 million accounts, the diversity of these accounts, ranging from corporate entities to those associated with government programs, has drawn significant attention from tax authorities.
A stark illustration involved an account holder who had deposits of ₹4.05 crore in a non-PAN linked account during the 2023-24 fiscal year, while their ITR reported a gross income of only ₹3.22 lakh. Similarly, an infrastructure company deposited ₹57.88 crore in its J&K Bank account but declared gross receipts of merely ₹38.49 crore in its ITR.
The Income Tax Department remarked that such practices enable individuals to obscure their assets from scrutiny, leading to considerable revenue losses for the government. The department suspects that the allowance of these non-PAN linked accounts by J&K Bank facilitates tax evasion.
To enhance accountability and transparency, the Income Tax Department has proposed that if a non-PAN linked account surpasses a certain deposit threshold, Suspicious Transaction Reports (STRs) should be filed with the department, and the findings should be communicated to the Reserve Bank of India. These recommendations aim to bolster tax compliance, prevent money laundering and terrorist financing, and ensure the financial stability of India.
Ritu Sarin serves as the Executive Editor for News and Investigations at The Indian Express group. With over four decades of experience in journalism, she specializes in areas such as internal security, money laundering, and corruption. Sarin has been a member of the International Consortium of Investigative Journalists (ICIJ) since 1999 and joined its Board of Directors in early 2023. She has played a pivotal role in numerous major investigative projects, including the Panama Papers and other high-profile investigations, and has conducted workshops on collaborative journalism internationally.
