The Income Tax Department found that around 1.54 lakh bank accounts were opened at J&K Bank without PAN between 2021 and 2024, despite handling deposits of about ₹4.88 lakh crore. The department called it a systemic failure, saying such accounts could facilitate tax evasion. The probe found reporting lapses, multiple high-value transactions through non-PAN-linked accounts, and mismatches between bank deposits and income tax returns.
An investigation by the Income Tax Department has found that around 1.54 lakh bank accounts were opened at Jammu & Kashmir (J&K) Bank between 2021 and 2024 without linking a Permanent Account Number (PAN). According to the investigation, these accounts recorded transactions of ₹15 lakh or more in a financial year, with total deposits reaching about ₹4.88 lakh crore.
Income Tax Department Flags ‘Systemic Failure’
In its final report released last year, the Income Tax Department described the issue as a “complete systemic failure.” It said that allowing large financial transactions through accounts without PAN linkage is a major risk and could be used for tax evasion. The department called it a significant red flag.
Most Accounts Opened Using Form-60
The investigation found that most of the accounts were opened using Form-60, which is submitted by people who do not have a PAN card.
The report identified:
- 32,498 government and government scheme-related accounts with deposits of about ₹4,68,508 crore. These included accounts of Self-Help Groups (SHGs) and Cluster Level Federations (CLFs).
- Around 1.25 lakh private accounts with deposits of ₹36,789 crore.
- 10,464 private accounts that received deposits of ₹50 lakh or more in a single financial year. Among these, 566 accounts belonged to 510 people who already had PAN cards but did not provide their PAN details while opening the accounts.
Bank Says Compliance Measures Have Been Taken
Responding to the investigation, J&K Bank said it held discussions with the Reserve Bank of India (RBI) and submitted a detailed compliance report. The bank stated that PAN has now been made mandatory for most categories of accounts, especially current accounts.
Investigation Began During 2024 Elections
The probe started during the 2024 Jammu & Kashmir Assembly elections after J&K Bank shared account-related information with the Income Tax Department. With the approval of the RBI, the department carried out a detailed investigation.
Multiple Accounts Used Without PAN
The investigation found that several people had opened multiple bank accounts in the names of different individuals and entities without linking PAN. Large amounts of money were deposited and withdrawn through these accounts, but the details were not reported to the Income Tax Department.
The report also identified 68 such accounts opened between 2004 and 2013, many of which belonged to textile companies in the Kashmir Valley. These accounts handled large financial transactions without PAN linkage or proper reporting.
Bank Admitted Reporting Lapses
As the investigation expanded, J&K Bank admitted that it had failed to report large transactions in accounts opened only with Form-60. The bank also informed the department that it deducted 20% Tax Deducted at Source (TDS) on interest earned in non-PAN-linked accounts, compared to 10% TDS for accounts linked with PAN.
Government Scheme Accounts Also Involved
The investigation found that non-PAN-linked accounts were also used for several government schemes. These included the J&K Bank Insurance Savings Account, Prime Minister’s Employment Generation Programme (PMEGP), National Urban Livelihoods Mission (NULM), Subsidy Reserve Fund Account (SRFA), and the Jammu & Kashmir Spurring Entrepreneurship Initiative. The report also mentioned deposits of ₹1.55 crore in savings accounts of NCC cadets.
Income Tax Department Finds Mismatches
The Income Tax Department closely examined the 30 largest private accounts without PAN linkage and compared their transactions with the Income Tax Returns (ITRs) filed by the account holders.
It found irregularities in 11 cases, including accounts linked to a cement store, petrol pump, clothing shop, hospital, and an infrastructure company.
In one case, an account received deposits of ₹4.05 crore during the 2023-24 financial year, while the account holder reported an annual income of only ₹3.22 lakh in the income tax return.
In another case, an infrastructure company deposited ₹57.88 crore into its J&K Bank account but declared gross receipts of only ₹38.49 crore in its income tax return.
Department Recommends Stronger Monitoring
The Income Tax Department said that accounts without PAN linkage make it easier to hide assets and income, resulting in possible revenue loss to the government. It stated that such tax evasion was possible because J&K Bank allowed accounts to be opened without mandatory PAN linkage.
The department has recommended that whenever deposits in a non-PAN-linked account exceed a specified limit, banks should prepare a Suspicious Transaction Report (STR), submit it to the Income Tax Department, and also share the information with the Reserve Bank of India (RBI).
