“Explore provisions under the Income Tax Act related to PAN surrender or cancellation, covering scenarios like duplicate PAN, death, business discontinuation, and dissolution of firms. Understand the absence of a specific procedure for surrendering or canceling PAN, implications under Section 272B, and questions regarding the responsibility for canceling PAN after business discontinuation or firm dissolution.”
Provisions under Income Tax Act relating to PAN Surrender
The requirement to surrender of PAN could be due to the following situations:-
1) Allotment of duplicate PAN or more than one PAN to the same person.
2) Due to death of the individual.
3) Due to discontinuance of business or dissolution of any firm/company/ or any other body, complete partition of HUF.
Section 139A of the IT Act is the relevant section which prescribes various circumstances when any person has to obtain PAN and Rule 114 prescribes the procedure and documents required for making application for obtaining the PAN depending upon the status of the assessee. Section 139A also describes the situations when furnishing of PAN is mandatory.
Sub section (7) to section 139A provides that:-
(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”.
Section 272B provides for imposition of penalty of Rs. 10,000/- for failure to comply with the provisions of section 139A.
It is very interesting and strange that there is no provision or procedure for surrendering /cancellation of PAN.
Section 176(3) of the Income Tax Act provides that “any person discontinuing any business/profession shall give to the AO notice of such discontinuance within fifteen day thereof”.
Section 272A(2)(b) provides for imposition of penalty @ of Rs. 500/- per day during which the failure continues to give the notice of discontinuance of business or profession as required by sub section (3) of section 176.
Dissolution of Firm
Suppose a firm discontinues its business and consequently is dissolved, it is mandatory to furnish information U/S 176(3) but there is no provision to apply for cancellation of PAN of the firm.
In the light of above discussion there are certain questions which need to be answered:-
1) If any firm is dissolved or the business is discontinued and information U/S 176(3) is furnished to the AO, then is it the duty of the AO to cancel the PAN or application for cancellation of PAN needs to be filed by the assesse?
2) Can penalty/late fees be imposed in case of dissolved firm U/S 234F of the Income Tax Act?
3) If any HUF ceases to exist due to complete partition, then is it necessary to apply for cancellation of PAN?
4) Should there be any legislation/ provision for cancellation/surrender of PAN.?
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