I-T Probe: 1.54 Lakh J&K Bank Accounts Without PAN Saw Rs 4.88 Lakh Crore Deposits

An Income Tax (I-T) probe has uncovered that 1.54 lakh accounts opened with Jammu & Kashmir Bank between 2021 and 2024 were not linked to PAN numbers, with cumulative deposits in those accounts touching Rs 4.88 lakh crore. The investigation, details of which were examined by The Indian Express, points to what the I-T department termed a 'systemic failure' and a 'significant red flag' for potential tax evasion.

Most of the accounts under scrutiny were Savings Bank accounts opened using Form 60, a declaration form for individuals without PAN cards. The probe categorised the accounts into several groups: 32,498 government-linked accounts, including those of Self Help Groups and Cluster Level Federations, with credits of Rs 4.68 lakh crore; and 1.25 lakh private accounts with total credits of Rs 36,789 crore. Among the private accounts, 10,464 had credits of Rs 50 lakh or more in a financial year, and 566 of these belonged to 510 individuals who had PAN cards but did not provide the details while opening the accounts.

The investigation began when J&K Bank handed over a data dump to the I-T department during the 2024 Assembly elections. It later expanded into a full-fledged inquiry with permission from the Reserve Bank of India (RBI). The probe found that account holders were setting up multiple accounts without PAN, and large transactions were not reported to the tax authorities. In total, 68 bank accounts opened between 2004 and 2013 were traced, many linked to textile companies in the Kashmir Valley.

J&K Bank, in response, said it has since held a 'supervisory meeting' with the RBI and submitted a 'comprehensive compliance' report. The bank stated that PAN linking has now been made mandatory for most account categories, including current accounts. The bank also admitted it had not flagged the issue of large transactions in unlinked accounts earlier and was charging 20% Tax Deducted at Source (TDS) on interest for such accounts, compared to 10% for PAN-linked accounts.

The probe also revealed that unlinked accounts were used to avail government schemes, including the J&K Bank Bima Bachat Khata, Prime Minister's Employment Generation Programme (PMEGP), National Urban Livelihood Mission (NULM), and others. For instance, cumulative credits of Rs 1.55 crore were recorded in Savings Bank Accounts for NCC Cadets.

Further analysis of the top 30 non-PAN linked private accounts, for which PAN numbers were later traced by the I-T department, showed discrepancies. In 11 cases—including owners of cement stores, gas stations, fabric stores, and a hospital—credits in the J&K Bank accounts were higher than income declared in tax returns. One glaring example involved an account holder with credits of Rs 4.05 crore in a non-PAN linked account in 2023-24, but a gross income of only Rs 3.22 lakh shown in the income tax return for that year.

The I-T department's final report, submitted last year, warned that these unlinked accounts, with substantial transaction volumes, present a 'staggering potential avenue for tax evasion'. However, J&K Bank has emphasised that the affected accounts form less than 1% of its over 2-crore account base.