• Short deduction Demand Due to Inoperative PAN.

These are the facts of the case thus far : 

1. Land was purchased 5th Dec 2023 via joint sale (three vendors comprising a mother and two daughters and 1 Purchaser). 
2. The Sale consideration was 5.6 Cr and divided equally between these Vendors (two vendors received Rs 1,86,66000 each and Third vendor Rs 1,86,68000). 
3. All Vendors represented as being resident Indian. PAN nos and Aadhaar cards were provided. PAN nos were assumed to be active (and not verified at that time via the “Verify PAN Status” on IT website which Purchaser was not aware of at that time). 
4. Given this background, 1% TDS was deducted and remitted to concerned dept for all Vendors on 5th Dec 2023 prior to sale. We have documented proof of payments. 
5. Purchaser received a notice dt 23/4/2025 from the IT dept with a demand to pay a shortfall deduction amounting to Rs 35,46,920 along with short deduction interest of Rs 35,469. 
6. This amt is computed to be exactly 19% of Rs 1,86,68000 (sale consideration for third vendor). 
7. On checking the “Verify PAN Status” on IT website presently, it is determined that the PAN of the third Vendor is inoperative as a result of non linking with Aadhaar. While we do not know if it was inoperative on sale transaction date of 5/12/2023 as this was not verified then, this remain the case on date. We can only presume that it has remained inoperative since or or before sale transaction date and continues till date. 
8. It is our understanding that in such case of inoperative PAN of resident Indian, the TDS is 20% (not 1%) but as a matter of relief the IT department has taken a view that the Purchaser / Deductor is NOT liable to bear shortfall of 19% in genuine cases where transactions took place prior to 31/3/2024.
9. We do not know if any of the Vendors, which includes the third Vendor, have paid their capital gains tax on this transaction and, if so, how much has been paid.
10. The Third Vendor has been sent (yesterday) FORM No. 26A - Form for furnishing accountant certificate under the first proviso to sub-section of section 201 of the Income-tax Act, 1961 - based on the advice of the Purchaser’s accountant.
11. Purchaser is yet to receive a response regarding 26A from the Third vendor’s representative / accountant and we have to assume at this stage that they might not be forthcoming with information regarding payment of CGT although Purchaser has no reason to believe otherwise either at this early stage.
12. There is no short deduction demand notice regarding the other two Vendors. Their PANs have been presently verified and found to be active which leads Purchaser to believe that it may a genuine error on the Third Vendor’s part although this may not be the case either. 

What should Purchaser’s next steps be given this background ? Any advice would be appreciated.