There are lot of grey areas in the notification dated October 9, 1998 which, if not corrected, might not only cause incontinence to assessees/persons but defeat the primary objective of the notification of widening the tax base.

The notification covers eight different transactions, effective November 1.

Major confusion is likely to break out on account of the definition of the words "banking company." According to sources, if this excludes the branches of the bank then people can easily split deposits in different branches (of the same bank) and can get away without quoting the PAN.

For instance, if X deposits Rs 40,000 each in three branches of the same bank, then he can clearly circumvent the requirements of thenotification. Not only this, X also has the option of splitting his deposits in the same branch so that each deposit is not more than Rs 50,000. "It is not clear if different deposits of the same person in the same branch can be construed as one deposit," said a banker.

Although the Central Board of Direct Taxes (CBDT) has clarified that the eight transactions will not be hampered because of the notification, only few are ready to buy the argument.

The reason: the notification casts an onus on people involved in the business transactions to provide details of the same to the investigation wing of the income-tax department.

As per the notification, persons, including stock brokers, managers or officers of the bank and the companies receiving application for installation of the telephone are required to provide within a month details of transactions.

These would include names and addresses of persons entering into the transactions, nature and date of transaction, amount of transaction and thePAN.

"The banker will be responsible for providing the details but there is no mention whether the banker can also ask for true or attested copies of the documents provided by parties entering into the transactions," sources said.

Banks are also worried that they will have an extra workload of providing details of every transaction within a month of these transactions are struck.

Sources in the revenue department confirmed that banks have approached them to change this period to quarterly or bi-monthly.

The notification (containing forms 60 and 61) also fails to state whether the photocopies of the documents produced in support of the address should be attached to the forms or not.

Documents like communication issued by any central or state authority or local bodies or even identity cards issued by any institution can be tendered in support of proof of residence.

"There is no sanctity in giving importance to I-cards as there are more chances of misuse," sources said. "Can wrong notices issued bythe I-T department be taken as proof of residence?" they asked.

The department is likely to be lenient towards procuring data of the eight transactions. However, considering that the I-T department will be bombarded with information running to a few lakhs every month, is it equipped to handle it?.