The Central Board of Direct Taxes (CBDT) has issued a strong warning to companies against the use of proxy or incorrect Permanent Account Numbers (PANs) in statutory filings, calling it a serious compliance violation under the Income Tax Act. This directive comes after the department identified several instances where dummy or unrelated PANs were used in income tax returns (ITRs), TDS filings, and director disclosures, often to bypass validations or mask real transactions. Such misuse may now attract stringent penalties, including prosecution under Sections 272B and 277.

According to the CBDT, each PAN used in filings must correspond to the actual identity of the individual or entity involved in the transaction, whether it pertains to employees, directors, vendors, or shareholders. The use of non-existent, borrowed, or deactivated PANs can lead to rejection of returns, cancellation of deductions, and blocking of refunds. The tax authority has integrated real-time validation tools in the e-filing system to detect PAN mismatches and generate automatic defect notices if inconsistencies are found across TDS returns, ITRs, and Form 26AS.

Companies are now required to regularly verify and update PAN details for all stakeholders, ensure accurate mapping in TDS software, and cross-check entries before submission. The CBDT emphasized that any errors or misuse detected during scrutiny or assessments will be treated as willful non-compliance. This warning forms part of a larger crackdown on identity misuse in corporate filings and reinforces the government’s focus on building a transparent, trustworthy digital tax environment backed by strict enforcement.