A Delhi cook cleared of a ₹4 crore tax demand after alleged business sales were linked to his PAN highlights the risks of unchecked identity theft and the need to monitor tax records.
A Delhi cook who said he earned too little to owe income tax was hit with a demand of nearly ₹4 crore after his PAN was linked to alleged business sales worth ₹24.62 crore, according to Business Today. The case has become a stark example of how misuse of a Permanent Account Number can snowball into a major tax dispute when false entries are left unchecked.
The report said Lalit first received a tax notice on February 26, 2024, which claimed he had made large cash sales through a packaging materials company. The department also said tax had been deducted at source at 1% on the amount, and the disputed transactions appeared in his Form 26AS, the annual tax statement that records income credited to a taxpayer’s PAN.
Lalit said he had no connection with the packaging business and had never carried out the transactions. He approached Greater Kailash police station and the Delhi Police cyber cell with complaints of identity theft, while his lawyer, A.K. Babbar, argued that Lalit had only shared copies of his PAN with contractors during earlier contractual jobs at Hotel Ashoka and Vigyan Bhawan. According to the report, the assessing officer told him to either pay the demand or challenge the order, but the appeal route would have required a pre-deposit of about ₹78 lakh.
The Delhi High Court later set aside the demand on October 6, 2026, The Economic Times reported, finding that the assessment had relied on Form 26AS and portal data without independent proof tying Lalit to the sales. The court also noted that tax officials had not established that they had properly investigated the packaging company or recorded the owner’s statement, and that the same figures had been counted twice in gross and net form. Judges said Lalit’s modest income, employment history and explanation that he had withdrawn provident fund savings and sought an economically weaker section certificate deserved objective scrutiny, while leaving open the possibility of fresh action if new evidence emerged within legal time limits.
The case is a reminder for taxpayers to review their Annual Information Statement and Form 26AS regularly for unfamiliar receipts, TDS entries or high-value transactions. Business Today said people should also check the GST portal’s “Search by PAN” function for unauthorised registrations, file police and cybercrime complaints if they spot suspicious activity, and notify tax authorities in writing while keeping bank statements, salary records and acknowledgement copies. If a notice arrives, the safest course is to respond within the deadline and seek professional advice quickly, rather than letting a false entry harden into a large tax claim.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
