Duplicate PAN Allotment and Protection of Credit Reputation: Madras High Court’s Direction to Issue Fresh PAN to First Allottee

1. Introduction

The decision of the Madras High Court in S. Senthil v. The Commissioner of Income Tax & Ors. (W.P. No. 21548 of 2022, decided on 23.09.2025 by Justice C. Saravanan) deals with a relatively novel, but increasingly important, intersection of:

taxpayer identification through PAN (Permanent Account Number), and
the credit information ecosystem (CIBIL score and banking systems).

The case arises out of a serious administrative error: the same PAN was allotted to two different individuals having similar names, one of whom (the “second allottee”) allegedly used the PAN to take loans and default, thereby generating heavily negative credit reports in CIBIL. The first allottee, the petitioner, bore the brunt of this error: banks refused him loans because his PAN was associated with defaults he had nothing to do with.

The core legal question was whether, in the face of an internal departmental instruction (Instruction No. 9, ITBA–PAN, dated 25.03.2021) that generally requires the first allottee to retain the original PAN, the High Court could direct issuance of a fresh PAN to the first allottee to protect him from the continuing consequences of the department’s mistake.

In doing so, the Court implicitly clarifies that:

Internal departmental instructions cannot be applied in a manner that perpetuates manifest injustice caused by the State’s own mistake.
Where a taxpayer suffers reputational and financial harm due to duplicate PAN allotment and consequent adverse credit history, the High Court can, under Article 226, direct remedial steps including issuance of a new PAN, subject to a check for outstanding tax dues under the old PAN.

2. Factual Background and Procedural History

2.1 Timeline of Events

The petitioner, S. Senthil, was issued PAN BLUPS2797G on 18.05.2007.
Subsequently, the same PAN (BLUPS2797G) was erroneously allotted to another person on 17.05.2012, whose name was also “Subramaniyan Senthil S/o. Subramaniyan” (the “second allottee”).
The second allottee allegedly availed of various loans using this PAN and defaulted, creating a negative credit record in TransUnion CIBIL linked to that PAN.
When the petitioner sought loans, financial institutions declined, because CIBIL data linked to BLUPS2797G showed multiple defaults. The petitioner’s creditworthiness appeared impaired even though the defaults were attributable to someone else.
The petitioner represented to the Income Tax Department that his PAN identity was being misused and he was suffering prejudice.
After a “thorough investigation”, the Department determined that the PAN had been inadvertently allotted to two persons. Based on Instruction No. 9 (ITBA–PAN, 25.03.2021), they:
- retained the PAN BLUPS2797G for the first allottee (the petitioner), and
- issued a new PAN PUWPS0015L to the second allottee on 01.07.2022.
The Department further wrote on 16.09.2022 to TransUnion CIBIL Limited requesting that:
- the credit score of the second allottee be shifted from BLUPS2797G to PUWPS0015L, and
- necessary communications be issued to banks where the second allottee maintains accounts.
Despite these steps, the petitioner continued to face difficulties, because his PAN was “in cloud” – historically tainted with adverse CIBIL entries.

2.2 Relief Sought

The petitioner approached the High Court under Article 226 of the Constitution, seeking:

A writ of mandamus directing the 1st and 2nd respondents (Commissioner of Income Tax and Deputy Director, Admin & TPS) to consider his representation dated 23.06.2022; and
A consequential direction to issue a fresh PAN card with a new PAN number in his name.

2.3 Respondents

Respondent 1: Commissioner of Income Tax (Admin and TPS), Chennai
Respondent 2: Deputy Director, Office of Commissioner of Income Tax (Admin and TPS)
Respondent 3: Senior Manager, NSDL e-Governance Infrastructure Ltd (PAN Services Unit)
Respondent 4: Jurisdictional Assessing Officer, ITO Non Corporate Ward 22(4), Tambaram

The Department resisted the prayer by relying on the ITBA–PAN Instruction No. 9 dated 25.03.2021, contending that it mandated that the first allottee must retain the PAN and the second allottee be given a new PAN, not vice versa.

3. Summary of the Judgment

The High Court held that the petitioner, as the original and first lawful allottee of the PAN, could not be made to suffer due to the Income Tax Department’s mistake in having allotted the same PAN to another person. The Court observed that:

“The Petitioner cannot be made to suffer on account of the mistakes committed by the Income Tax Department.”

While the Department had already given a new PAN to the second allottee and written to CIBIL to transfer the credit history, the Court found that the petitioner’s PAN identity remained contaminated in practice because:

his identity and financial transactions remained traceable to a PAN “which is in cloud”, and
negative CIBIL remarks historically associated with that PAN continued to impede his access to credit.

The Court therefore directed:

“…there shall be a direction to the Respondents to process the request of the Petitioner for issuance of a fresh PAN (Permanent Account Number) to the Petitioner subject to the Petitioner having no other dues in the old PAN number. If the Petitioner has no other arrears of tax liability in the old PAN, the Petitioner shall be issued with a new PAN. This exercise shall be completed within a period of three months…”

Thus, the Court:

Granted the writ petition, directing issuance of a new PAN to the petitioner;
Conditioned the relief on verification that there were no outstanding tax arrears linked to the old PAN; and
Imposed a time limit of three months for completion of this exercise.

The writ petition was disposed of with no order as to costs.

4. Analysis of the Judgment

4.1 The Department’s Instruction No. 9 (ITBA–PAN) and Its Role

A central element in the case is Instruction No. 9, ITBA–PAN dated 25.03.2021 issued by the Directorate of Income Tax (Systems), New Delhi. From the text quoted in the judgment:

“As per the latest ITBA-PAN Instruction NO.9 dated 25.03.2021 … the first/second allottee will retain the PAN and first/second allottee will be allotted with fresh PAN and first/second allottee has to surrender the PAN, which has been allotted to him/her and simultaneously apply and obtain a new PAN as per the prescribed procedure.”

Although the reproduced language is awkward (likely because of a templated “first/second allottee” formulation), the Department’s understanding, as reflected in its counter-affidavit and actions, is clear:

In the event of duplicate PAN allotment, the first allottee keeps the original PAN, and
The second allottee is issued a fresh PAN and required to surrender the duplicate.

The Department claims to have complied with this instruction by:

retaining the original PAN (BLUPS2797G) with the petitioner; and
issuing a new PAN (PUWPS0015L) to the second allottee.

Crucially, the Court does not strike down this Instruction, nor declare it invalid in general. Instead, it effectively holds that in the unique facts of this case, a rigid application of the Instruction would perpetuate injustice and therefore the petitioner must be provided a fresh PAN notwithstanding the Instruction.

4.2 The Court’s Core Legal Reasoning

4.2.1 Non-perpetuation of State-caused prejudice

The fulcrum of the Court’s reasoning is that the State cannot allow its own mistake to visit continuing harm upon a citizen. The Department’s error – allotting the same PAN to two individuals – directly caused severe collateral consequences to the petitioner, namely:

denial of loans by financial institutions; and
association of his PAN with the adverse CIBIL history of another person.

The Court recognises that even after giving a fresh PAN to the second allottee and writing to CIBIL, the practical harm persisted because:

the petitioner’s PAN-based identity remained attached to a number with a “clouded” past, and
market actors (banks, NBFCs, etc.) might continue to rely on historical CIBIL data and internal risk systems which still draw on past linkages to the old PAN.

Thus, mere administrative corrections on paper at the departmental and CIBIL levels were insufficient to provide full remedial relief. The Court therefore exercises its writ jurisdiction to grant a more effective remedy: a clean and untainted new PAN identity to the petitioner himself.

4.2.2 Conditional relief: protection of revenue interests

While sympathetic to the petitioner, the Court also safeguards the legitimate interests of the Revenue. The direction to issue a fresh PAN is explicitly conditional:

“…subject to the Petitioner having no other dues in the old PAN number. If the Petitioner has no other arrears of tax liability in the old PAN, the Petitioner shall be issued with a new PAN.”

This condition serves several purposes:

It ensures that the taxpayer does not use the change of PAN to evade or obscure outstanding tax liabilities.
It requires the Department to scrutinize the old PAN record carefully before issuing a new number.
It maintains the integrity of the tax collection system, while still affording relief from the consequences of an identification error.

The Court thus balances:

individual fairness to the petitioner, and
systemic protection of revenue interests.

4.2.3 Critique of the manner in which Instruction No. 9 was applied

The Court makes an important observation:

“In fact, the said person namely Subramaniyan Senthil S/o. Subramaniyan should have allowed to continue with PAN allotted as CIBIL remarks are relating to that person. Instead, the Petitioner should have been allotted with PAN.”

This statement is significant for two reasons:

Policy logic reversed:
The Court suggests that, as a matter of logic and fairness, the person to whom the adverse CIBIL remarks actually pertain should continue with the PAN that already carries those remarks. The “clean” party (petitioner) should receive a new, untainted identifier. This is the reverse of what the Department has done.
Flexible, justice-oriented approach to administrative instructions:
The Court implicitly holds that an internal instruction cannot be allowed to have the effect of entrenching, rather than eliminating, the harm caused by the Department’s mistake. Where equitable considerations so demand, the High Court can depart from a literal application of such instructions to craft an appropriate remedy.

The decision does not invalidate Instruction No. 9 generally; it simply refuses to let it dictate an unjust outcome in a hard case.

4.3 Precedents and Doctrinal Background

4.3.1 Absence of explicit judicial precedents in the text

The judgment, as reproduced, does not cite any specific earlier case law or precedents. It is a fact-intensive decision grounded primarily in:

the admitted mistake of the Income Tax Department, and
the demonstrable prejudice suffered by the petitioner.

Nevertheless, the reasoning fits within a broader framework of established constitutional and administrative law principles. While these are not expressly referenced in the judgment, they provide helpful doctrinal context.

4.3.2 Relevant principles (as background, not cited)

The following legal principles, though not mentioned by name in the judgment, are conceptually consistent with its reasoning:

Principle against arbitrary State action (Article 14):
The State cannot act in a manner that is manifestly arbitrary or that unfairly burdens an individual due to no fault of his own. Here, allowing the first allottee to continue to suffer because of the Department’s duplication error would border on arbitrariness.
Duty to correct administrative errors:
Administrative law recognises that when the Government commits an error that prejudices a citizen, it must take reasonable steps to cure the prejudice. A mere technical correction (issuing a new PAN to the second allottee) is insufficient if the original prejudice (tainted credit profile) continues.
Effectiveness of writ remedies (Article 226):
High Courts possess wide powers to craft effective remedies so that the relief granted is not illusory. Directing issuance of a fresh PAN, rather than merely confirming departmental actions, exemplifies an effective and meaningful remedy.
Internal instructions vs. law:
Departmental instructions guide internal administration but cannot override statutory rights or constitutional protections. When the rigid application of an instruction would cause substantial injustice, courts may depart from it in individual cases.

The judgment thus reinforces – in a specific factual setting – long-standing principles that the State’s own administrative machinery must not become a source of unjust hardship to law-abiding citizens.

4.4 Impact and Significance

4.4.1 Impact on PAN administration and duplicate allotment cases

The decision has a potentially wide impact in situations where:

the same PAN has been mistakenly allotted to multiple individuals, and
one allottee’s conduct (e.g., loan defaults, frauds) adversely affects the other’s reputation and access to credit.

Key implications:

Departments must consider real-world consequences, not just paperwork:
It will not suffice for the Department to mechanically follow Instruction No. 9 if doing so continues to harm an innocent taxpayer’s financial reputation.
Scope for tailored remedies:
Tax authorities may need to adopt a more case-by-case approach when duplicate PAN errors intersect with CIBIL/credit system records, especially where:
- significant loan defaults are involved;
- banks are denying credit based on PAN-linked data; and
- the first allottee has a demonstrably clean record.
Encouragement for affected taxpayers to seek writ remedies:
Taxpayers facing comparable issues now have a clear precedent that the High Court may grant fresh PANs to innocent allottees where departmental errors and credit reporting practices combine to cause serious prejudice.

4.4.2 Interaction with Credit Information Companies (CIBIL and others)

While TransUnion CIBIL is not a party to the writ, it features in the narrative because:

the Department has written to CIBIL (16.09.2022) asking it to shift the second allottee’s credit score to his new PAN; and
the petitioner’s plight illustrates how strongly PAN-based identification links into the credit-reporting ecosystem.

The judgment underscores that:

Misalignment between tax records and credit records can lead to profound real-world harms (e.g., denial of credit, reputational damage);
Administrative corrections must be followed through in all linked systems (tax databases, NSDL, CIBIL, banks), and
In some cases, the cleanest solution is to grant the genuinely innocent party a fresh identifier.

This may encourage more structured cooperation between:

tax authorities,
NSDL (PAN issuance agency), and
credit information companies (like CIBIL),

particularly in cases of identity collision or administrative duplication.

4.4.3 Administrative instructions vs. judicial oversight

Another important impact is on the status of internal departmental instructions. Instruction No. 9 was designed to rationalise the handling of duplicate PAN cases. However:

The Court’s decision shows that such instructions do not have the force of law in the sense of binding courts where they produce unjust results.
The High Court retains the power to mould relief notwithstanding such internal guidelines, particularly to prevent continuing injustice.

This may encourage the tax administration to:

refine future instructions to expressly provide flexibility in hardship cases, or
introduce internal mechanisms that can mirror the kind of equitable solutions adopted by the Court here, reducing the need for writ interventions.

5. Complex Concepts Simplified

5.1 What is a PAN and why is duplication so serious?

A PAN (Permanent Account Number) is a unique 10-character alphanumeric identifier issued by the Income Tax Department to individuals and entities. It is used for:

tracking tax payments and returns,
linking major financial transactions (opening bank accounts, large deposits, securities transactions, property deals, etc.), and
serving as a key proof of identity in the financial system.

Duplicate allotment – where two different persons receive the same PAN – is extremely serious because:

their financial transactions get mixed in government and private databases, making it hard to distinguish who did what;
one person’s defaults or fraudulent activities can wrongly be assumed to belong to the other;
this can impact not only tax assessments, but also creditworthiness, banking relationships, and even criminal investigations.

5.2 What is a CIBIL score and how is it linked to PAN?

TransUnion CIBIL is a leading Credit Information Company in India. It maintains credit histories of individuals and businesses and assigns a CIBIL score, which is used by banks and NBFCs to assess the risk of lending.

The CIBIL system typically relies on identifiers like:

PAN,
date of birth,
name and address, etc.

When a particular PAN is associated with multiple defaults and unpaid loans, the credit score linked to that PAN deteriorates. If the same PAN is shared by two persons due to an administrative mistake, both can unfairly share the same negative credit profile.

In this case, the second allottee’s alleged defaults poisoned the CIBIL profile of the petitioner’s PAN, leading banks to refuse him credit.

5.3 What is a writ of mandamus under Article 226?

A writ of mandamus is a constitutional remedy issued by a High Court under Article 226 of the Constitution of India. It is:

an order directing a public authority (such as a government department) to perform a public or statutory duty,
typically invoked when an authority either fails to act or acts in an arbitrary or unreasonable manner.

In this case, the petitioner sought a mandamus to:

compel the Income Tax Department to consider his representation; and
issue a fresh PAN to cure the grave prejudice he was suffering.

5.4 Internal instructions vs. statutory law

Departmental instructions (like Instruction No. 9, ITBA–PAN) are internal guidelines meant to ensure consistency and efficiency in administration. They are not, by themselves, statutes or rules made under an Act.

Therefore:

They cannot override statutory provisions or constitutional rights;
Courts may, in appropriate cases, direct a different course of action if applying an instruction would cause serious injustice.

The present judgment is an example of the High Court prioritising substantive justice over a rigid, mechanical adherence to an internal instruction.

6. Conclusion: Key Takeaways and Broader Significance

The judgment in S. Senthil v. Commissioner of Income Tax establishes an important and pragmatic precedent in the context of duplicate PAN allotment and its fallout in the credit ecosystem. The main takeaways are:

Protection of innocent taxpayers from State-caused harm:
When the Income Tax Department’s own error (duplicate PAN allotment) results in serious financial and reputational injury to a law-abiding taxpayer, the High Court will not permit that injury to continue unchecked.
Fresh PAN can be directed even for the first allottee:
Despite an internal instruction that the first allottee should retain the original PAN, the Court held that the first allottee can be granted a new PAN in order to free him from the lingering consequences of the Department’s error.
Balance between fairness and revenue protection:
The grant of a new PAN is made conditional on the petitioner having no outstanding tax liabilities under the old PAN. This ensures that relief from reputational harm does not become a tool for avoiding tax obligations.
Judicial oversight over internal instructions:
The case underscores that administrative instructions cannot be applied in a way that perpetuates injustice. High Courts, in exercise of writ jurisdiction, may depart from such instructions in hard cases to secure effective remedies.
Recognition of the PAN–CIBIL–banking linkage:
The judgment explicitly acknowledges the strong linkage between PAN-based identities and the credit information system. It thus points to a need for closer coordination between tax authorities, NSDL, and credit bureaus when dealing with identity-related administrative errors.

In the broader legal context, the decision reinforces a key constitutional message: a citizen should not carry the burden of systemic and administrative failures of the State. Where such failures distort a person’s access to the financial system and taint his reputation, High Courts can and will intervene to provide meaningful, real-world relief – here, in the form of a clean PAN identity for an innocent taxpayer.

Duplicate PAN Allotment, Credit Reputation, and Taxpayer Protection: Commentary on S. Senthil v. Commissioner of Income Tax (Madras High Court, 23.09.2025)